‘Everything is dead’: How record drought is wreaking havoc on the Amazon

Energy News Beat

Curralinho, Brazil – For communities on the Brazilian island of Marajó, the ebb and flow of the Canaticu River marks the turn of the seasons.

During the rainy months, the river is several metres deep, lapping below the wooden houses that rise from its shores on stilts. Residents rely on its water for drinking, cooking and washing.

But when summer hits, the river dwindles to a stream. Still, its flow is normally sufficient for locals to meet their daily needs.

This year, however, a severe drought has engulfed large swaths of Brazil’s Amazon rainforest. All that remains of the Canaticu River in some areas is a dark brown trickle, laden with bacteria and almost completely dried up.

“Now we cannot use it for anything. It wasn’t like this before,” said 36-year-old Elizete Lima Nascimento, who has lived in one of the riverside communities, Serafina, for the past decade.

The dry conditions have sparked a crisis in towns like Serafina — one that could transform their way of life for generations to come.

Inhabitants in the community of Serafina use river water for washing and even drinking [Apolline Guillerot-Malick/Al Jazeera]

Hundreds of thousands of people rely on the Amazon’s rivers and streams for food, transportation and income.

But the historically low water levels have forced residents to reimagine their relationship to the environment. One tributary, the Rio Negro, plunged to levels not seen in 121 years.

“We are completely dependent on nature,” Maria Vanessa Tavares de Souza, a 36-year-old teacher who lives in Serafina, said during a community meeting to discuss the problems caused by the drought.

“Now that climate change has unbalanced everything, it’s going to be hard for us to survive here.”

Already, one of the residents’ primary food sources is threatened: fish. Some have been left stranded as the river recedes — and in the water that remains, the corpses of other fish float to the surface.

Abnormally warm temperatures are suspected in the mass die-off. Residents fear the dead fish could pollute the water as they decompose.

Nine heatwaves have hit Brazil since the beginning of the year, with the heat index in Rio de Janeiro soaring to almost 60 degrees Celsius (140 degrees Fahrenheit) in November. Worldwide, 2023 is expected to be the hottest year on record.

In Serafina’s community hall, residents gather to discuss problems posed by the drought [Apolline Guillerot-Malick/Al Jazeera]

Scientists have blamed climate change, driven by the burning of fossil fuels, for the rising temperatures and extreme weather conditions.

This year’s El Niño — a climate phenomenon that warms surface waters in the equatorial Pacific region — has been particularly intense, contributing to the Amazon’s drought.

But the trend towards drier weather has been a long time coming. A string of harsh summers already led many Serafina residents to dig wells in their backyards to access subterranean water, instead of relying on the river.

Others have called for the installation of a drinking water distribution system, a major infrastructure project that would consist of pipes and storage facilities. They argue the wells are unreliable and cannot stand in for a long-term solution.

Still, well owners like Nascimento say their homemade water systems have been pivotal to withstanding the drought.

“The well is extremely important. We use its water for everything — for drinking, cooking, making açai, washing both ourselves and our clothes,” she said, as she lifted the wooden planks in her garden to reveal the six-metre-deep hole.

Not every family has a well, though, so residents that do own one share their water supplies with neighbours. Paula Lima, 43, brings home more than 50 litres (13 gallons) a day from a well at her cousin’s house on the other side of the community, just to meet her family’s needs.

The trips have contributed to Lima’s back problems. But she has no choice. Consuming the river’s water when its level is so low triggers vomiting and diarrhoea — if not worse.

Many households in Serafina now use wells for drinking water, particularly when the river water becomes too muddy to be consumed [Apolline Guillerot-Malick/Al Jazeera]

Eleniuda Costa Paiva de Souza, a 30-year-old nurse, recently had to take her two-year-old daughter to the nearest hospital — a trip that required trekking across the jungle, then travelling five more hours by boat. Her child had become ill after ingesting the river’s sludge.

De Souza said she intends to leave the community shortly. “Life here is only going to get worse. In town, things will be easier,” she explained.

Isolation is part of life for riverine communities: Serafina hugs a serpentine bend in the river, surrounded by rainforest as far as the eye can see. But the weak flow of the Canaticu River has made Serafina even more secluded.

To stock up on supplies, locals normally use the river to travel to nearby towns. But with the water so shallow, residents are forced to manoeuvre their small wooden boats at a snail’s pace to avoid logs and exposed roots.

Many worry that, if a medical emergency were to occur, it would take too long to reach the closest town.

Downriver, at the mouth of the Canaticu, the municipality of Curralinho has faced its own struggles amid the severe drought.

Located on the southern coast of Marajó, the town and its population of nearly 34,000 saw fires tear through thousands of hectares of nearby rainforest in November.

Curralinho was not alone in contending with raging flames. In the first two weeks of October, more than 2,900 blazes erupted in the state of Amazonas, a record number.

The smoke was so thick that it choked the region’s biggest city, Manaus, complicating navigation and the delivery of essential supplies.

Criminal enterprises have also taken advantage of the dry conditions to clear the rainforest with fire, as part of land-grab schemes.

In the countryside of Curralinho, firefighters patrol a former açai plantation destroyed by fires [Apolline Guillerot-Malick/Al Jazeera]

But in Curralinho, small-scale farmers were largely responsible for the blazes. They use fire as a crop management tool, to remove the remnants of the previous year’s harvest and neutralise the soil’s acidity.

The tinder-dry conditions, however, led some of the fires to roar out of control.

The town had declared a state of emergency as early as September, warning of heightened fire risk during the drought.

Precipitation in the Amazon had been below average for at least six months prior. One of the long-term causes is deforestation: Rainforests soak up and release moisture, helping to generate cycles of rainfall. But without the densely packed trees, the humidity drops, meaning less rain.

“Ten to 15 years ago, these fires weren’t a problem. The forest used to be more humid, which meant the flames would not propagate,” said Ezaquiel Pereira, who works for Curralinho’s environmental department.

Machinery to prepare the soil for planting could stop farmers from starting the blazes. But that equipment can cost about $25,000, Pereira added.

For farmers like 65-year-old Maria Terezina Ferreira Sampaio, such an expense is out of the question.

Fires and drought have caused 65-year-old farmer Maria Terezina Ferreira Sampaio to lose part of her cassava crop [Apolline Guillerot-Malick/Al Jazeera]

Sampaio lives on the outskirts of Curralinho with her husband in a small, bare wooden house where she bought up five children. The couple depend on the sale of crops to complement their retirement stipends, allowing them to buy food, medicine and clothes.

This year, the drought devastated their orange, coconut, lemon and banana trees and impeded their cassava plants from growing to an edible size.

“I’ve been crying and crying. After so much sacrifice…” Sampaio’s words trailed off, as she looked in despair at the parched ground, dry leaves crackling beneath her feet.

Despite their best efforts, hundreds of people have had their crops wiped out due to the lack of rain, said Curralinho’s environmental secretary Esmael Lopes.

On a regional scale, the worst of the drought could still lie ahead, as El Niño tends to intensify in December before petering out in April or May.

In Curralinho, sharp bursts of rain this month have lifted spirits and provided hope of relief from the dry spell. But even if wet weather were to come now, it would be too late, Sampaio said.

“We should already be harvesting. Instead, everything is dead,” she said.

Communities that rely on the rainforest’s waterways now find themselves struggling with fire and plunging water levels.

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Secrets of the Clergy

Energy News Beat

Over the past 20 years, religious organisations from the Catholic Church to Jehovah’s Witnesses have had a reckoning with cases of child sexual abuse. Many states have tried to tackle the abuse by making clergy mandatory reporters of abuse to officials, just like doctors, therapists and teachers are. However, more than 30 states in the United States do not require church officials to report knowledge or allegations of child abuse if the information is deemed privileged, specifically coming from confession or counselling. It means that abuse can all too often be hidden – and survivors are left without recourse or justice.

Fault Lines investigates how state laws in the US can lead to child sexual abuse in religious communities going unpunished.

Fault Lines examines how state laws in the US can lead to child sexual abuse in religious communities going unpunished.

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Ireland to launch legal action against UK over Troubles amnesty law

Energy News Beat

Ireland says it will mount a legal challenge against the United Kingdom over a new law that gives some immunity from prosecution for offences committed during three decades of sectarian violence in Northern Ireland.

Irish Deputy Prime Minister Micheal Martin said on Wednesday that “after much thought and careful consideration”, his government is launching a legal challenge against the Legacy and Reconciliation Bill, which critics say shuts down access to justice for victims and survivors.

The law, passed in September, stops most prosecutions for alleged killings by armed groups and British soldiers during the Troubles, the three decades of violence in which more than 3,500 people died.

Many groups on the island of Ireland are vehemently opposed to the new law, including victims’ families, human rights organisations and all major political parties.

Martin said Britain had not properly engaged with people affected by the law before passing it.

“The British government enacted this legislation on September 18, 2023, shutting off any possibility of political resolution,” Martin said. “We now find ourselves in a space where our only recourse is to pursue a legal path.”

Irish Prime Minister Leo Varadkar said the case would be taken to the European Court of Human Rights in Strasbourg, France. Ireland plans to argue that aspects of the law are incompatible with the UK’s obligations under the European Convention on Human Rights.

The United Nations and the Council of Europe have backed Ireland’s position, Varadkar said.

“It is something that we’re genuinely doing with a sense of regret and would prefer not to be in this position, but we did make a commitment to survivors in Northern Ireland and to the families of victims that we would stand by them,” he said.

The Troubles – a conflict over British rule in Northern Ireland – pitted Irish nationalist armed groups seeking a united Ireland against pro-British “loyalist” paramilitaries and the British military. It eventually came to an end in 1998 through a peace deal.

About 1,200 deaths from that time remain under investigation, according to the UK government.

Victims’ families have already been challenging the new law in the Northern Ireland courts.

Amnesty International Northern Ireland Deputy Director Grainne Teggart said the Irish government’s pushback is essential.

“The U.K. government doggedly pursued this legislation which shields perpetrators of serious human rights violations from being held accountable. It’s important that the Irish government takes this stand,” she said.

“This challenge is vital for victims here and around the world who face the prospect of similar state-gifted impunity,” Teggart said.

Ireland to argue that aspects of the UK law are incompatible with obligations under European Convention on Human Rights.

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Roman Abramovich loses legal attempt to overturn EU sanctions

Energy News Beat

Russian billionaire Roman Abramovich has lost a legal challenge aimed at overturning European Union sanctions imposed on him in the wake of Russia’s invasion of Ukraine.

Abramovich had filed a lawsuit at the EU’s general court against the European Union Council, which imposed punitive sanctions on the 57-year-old in 2022 as part of measures targeting Russia and President Vladimir Putin’s close allies after Russia invaded Ukraine.

The court in Brussels rejected the challenge and also dismissed his claims for compensation, noting his role in the Russian steel company Evraz and the fact that steel provided a major source of revenue to the Russian government.

“The General Court dismisses the action brought by Mr Abramovich, thereby upholding the restrictive measures taken against him,” it said in its ruling on Wednesday.

“The [European] Council did not in fact err in its assessment by deciding to include, then maintain, Mr Abramovich’s name on the lists at issue, in the light of his role in the Evraz group and, in particular, its parent company,” it added, referring to the sanctions lists.

Abramovich, who also holds Israeli citizenship and is a former owner of Premier League football club Chelsea, became one of the world’s most powerful businessmen after the 1991 break-up of the Soviet Union. Forbes estimates his net worth at $9.2bn.

In a statement issued on his behalf, Abramovich said he was disappointed by the ruling, which he can appeal.

He said the court had not considered some of the arguments used by the EU Council, including the proposition that Abramovich had benefitted from the Russian government – which he said was a false suggestion.

“Mr Abramovich does not have the ability to influence the decision-making of any government, including Russia, and has in no way benefited from the [Ukraine] war,” the statement said.

“The court’s decision to maintain the sanctions against Mr Abramovich was based purely on the court defining Mr Abramovich as a ‘Russian businessman’ which under today’s very broad EU regulations is sufficient to remain sanctioned, even if you are just a passive shareholder in a business sector with no connection to the war.”

The businessman has also been punished in the United Kingdom and had his assets frozen in response to Russia’s invasion of Ukraine.

Abramovich was forced to sell Chelsea after being sanctioned by the British government for what it called his enabling of Putin’s “brutal and barbaric invasion” of Ukraine. The sale of the Premier League club for 2.5 billion pounds ($3.2bn) — then the highest price ever paid for a sports team — was completed by a consortium fronted by Los Angeles Dodgers part-owner Todd Boehly.

It marked the end of the trophy-filled, 19-year tenure of Abramovich.

The EU has imposed 12 rounds of sanctions on Russia since Putin ordered his troops into Ukraine almost two years ago. The measures have targeted the energy sector, banks, companies and markets, and made more than 1,000 Russian officials subject to asset freezes and travel bans.

The EU imposed punishment on the businessman in 2022 as part of measures targeting Russia and Putin’s close allies.

Source: Oilprice.com

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US charges alleged Hezbollah member over 1994 Buenos Aires bombing

Energy News Beat

The United States has charged an alleged Hezbollah member, Samuel Salman El Reda, with giving material support to a “terrorist group”, accusing him of providing assistance for a 1994 bombing in Argentina.

Federal prosecutors announced charges against the 58-year-old on Wednesday, linking El Reda to the truck bombing of the AMIA Jewish community centre in Buenos Aires, which killed 85 people.

“This indictment serves as a message to those who engage in acts of terror: that the Justice Department’s memory is long, and we will not relent in our efforts to bring them to justice,” Assistant Attorney General Matthew Olsen of the US Department of Justice’s National Security Division said in a press release.

Rescue workers search for survivors and victims in the rubble left when a car bomb destroyed the Buenos Aires headquarters of the Argentine-Israeli Mutual Association (AMIA) on July 18, 1994 [File: Enrique Marcarian/Reuters]

The US has long characterised the 1994 bombing as an example of the far reach of the Iran-backed group Hezbollah, which at the time of the bombing was locked in a deadly battle with Israeli forces occupying southern Lebanon.

Iran and Hezbollah denied responsibility for the attack, which sent shockwaves through the city’s Jewish community. Small commemorative tiles with the names of those killed can still be seen on sidewalks around Buenos Aires.

US authorities said El Reda, a dual Lebanese-Colombian citizen, has helped coordinate the activities of Hezbollah’s Islamic Jihad Organization in South America, Asia and Lebanon since at least 1993.

The statement from the Justice Department said El Reda is based in Lebanon and “remains at large”. The US Department of State sanctioned him in 2019 and offered $7m for information regarding his whereabouts.

The bombing remains a source of controversy in Argentina, where former President Cristina Fernandez de Kirchner has been accused of working to shield the perpetrators of the attack through a joint investigation with Iran, which helped found and nurture Hezbollah.

Argentina has also accused Hezbollah of carrying out a 1992 attack on the Israeli embassy in Buenos Aires, which killed 29 people. The country froze Hezbollah’s assets and branded it a “terrorist organisation” in 2019.

The bombing of a Jewish community centre killed 85 people, and Hezbollah has been accused of other attacks in Argentina.

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Venezeula, US reach prisoner swap deal

Energy News Beat

The United States has reached a deal to secure the release of 10 citizens from Venezuela, including six people who it said had been wrongfully detained, according to the White House.

As part of the agreement, US President Joe Biden agreed to grant clemency to Alex Saab, a Colombian businessman and ally of President Nicolas Maduro who was in a Miami jail awaiting trial on a charge of money laundering.

Saab, who was arrested on a US warrant for money laundering in 2020 – was released from custody and returned to Venezuela on Wednesday, the Venezuelan government said.

US prosecutors have accused Saab of siphoning off $350m from Venezuela via the United States in a scheme that involved bribing Venezuelan government officials. He has denied the charge.

The White House said Venezeula had agreed to release at least 20 Venezuelan prisoners, including “political detainees”.

The prisoner swap talks were facilitated by Qatar, the White House said. Qatar’s chief negotiator met Maduro last week.

Six Venezuelan activists have already been freed, according to their lawyer and the wife of one of them. The longtime education campaigners were convicted on conspiracy charges this year and sentenced to 16 years but have proclaimed their innocence.

The White House has said in recent weeks that it expected to see progress on prisoner releases if it were to continue with sanctions relief for Caracas, which was unveiled in October in response to an agreement by the Venezuelan government to hold fair elections in 2024.

While relations between the US and Venezuela remain uneasy, the two nations have taken steps to ease tensions in recent months. In recent weeks, however, the White House had warned that it was considering an end to sanctions relief if more progress was not made on prisoner releases.

As part of the agreement, US President Joe Biden agreed to grant clemency to Alex Saab, an ally of Nicolas Maduro.

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Russia’s Oil Exports to China and India Surge

Energy News Beat

Russia has increased significantly its crude oil exports to China and India this year, with volumes to China hitting 100 million tons annually, or around 2 million barrels per day, Nikolay Tokarev, the head of Russian oil pipeline monopoly Transneft, told Russian media on Wednesday.

“Export volumes to China and India have increased significantly; many times over. I can say that about 70 million tonnes of oil were supplied to India this year, while about 100 million tonnes of oil went to China,” Russian news agency Interfax quoted Tokarev as saying in an interview with state television Rossiya 24.

According to the Transneft executive, Russia sent crude to new markets this year.

“New markets have appeared: Egypt, Morocco, Myanmar, Pakistan. I can list many more,” Tokarev said.

China and India have become the key export outlets for Russia’s oil this year after the EU embargo on Russian crude and products and the G7-led price caps, above which Western insurers and financiers are prohibited from offering services for the shipment of Russian oil. Both China and India saw their respective imports of crude from Russia hit a record high at some point in 2023.

In November, Russia remained China’s top crude supplier, with Beijing importing around 2.2 million bpd of Russian oil last month, per Chinese customs data cited by Reuters.

Between January and November, China’s imports of Russian crude oil jumped by 22.2% compared to the same period of 2022, according to the data.

India has also become a top buyer of Russian crude oil alongside China since the Russian invasion of Ukraine and the embargoes and price cap the EU, the U.S., and the G7 imposed on Moscow in an attempt to stifle Putin’s oil revenues.

Indian imports of Russian crude hit a four-month high last month, at 1.6 million bpd, according to data Reuters has obtained from trade sources. The November imports were 3.1% higher than India’s intake of Russian crude in October and accounted for more than a third of all Indian crude oil imports last month.

Source: Oilprice.com

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Red Sea Tensions Threaten to Disrupt Diesel Market Stability

Energy News Beat
Increased distillate production and slowing economic activities have led to rising diesel stocks and falling prices.
Weak manufacturing activity in the U.S. and Europe contributes to reduced diesel demand, easing the market.
Geopolitical tensions near the Red Sea present potential disruptions, threatening to impact diesel supply chains and market stability.

Diesel and other distillate inventories are higher now than they were this time last year, suggesting that a tight global diesel market has started to ease, in part due to slowing construction and manufacturing activity in the United States and major European economies.

Refiners produced high levels of distillate volumes in the third quarter of 2023, adding to stockpiles, while the economic slowdown is weighing on diesel consumption.

U.S. diesel prices have dropped in recent weeks and are now at their lowest since July—welcome news for the Fed’s continuing fight against inflation as the prices of goods are closely linked with the price of diesel.

While the previous diesel tightness is showing signs of easing, manufacturing and construction activity going forward could determine how the supply-demand balance in distillate markets will look.

Relentlessly rising interest rates have slowed construction activity and factory output globally, but the recent Fed pivot signaling three rate cuts next year could reinvigorate the U.S. economy after a “soft landing” and a rise in manufacturing could lead to renewed tightness in distillate markets.

U.S. distillate fuel inventories increased by 1.5 million barrels in the week ending December 8, 2023, but are about 12% below the five-year average for this time of year, the latest weekly inventory report from the Energy Information Administration (EIA) showed.

Below-average distillate stocks suggest that an uptick in manufacturing and construction next year could cause another concern about a tight diesel market.

For now, the diesel crunch is easing.

But the geopolitical risk near the Red Sea, which prompted major shippers to seek alternative routes, could increase the voyage length for shipments of petroleum products from the Middle East and India to Europe and from Russia to China and India, creating chaos on the oil and product markets.

Diesel Stocks Rise

Globally, stocks have risen over the past year and have narrowed the deficit to ten-year seasonal averages, according to estimates by Reuters senior market analyst John Kemp.

Distillate stocks in the U.S., Europe, and Singapore either increased or tracked seasonal averages between September and November after narrowing in August the deficit to ten-year averages compared to August 2022, Kemp notes.

However, as diesel consumption is the most sensitive of all the refined products to economic growth and the business cycle, weak manufacturing is easing the diesel crunch.

The price of diesel has just fallen below $4 per gallon for the first time since July, Patrick De Haan, head of petroleum analysis at GasBuddy, wrote on Monday, noting that it is “also very welcome news for the economy as nearly all goods are impacted by the price of diesel.”

Weak Manufacturing 

Still, part of the diesel price decline—apart from lower crude oil price, of course—is continued weakness in manufacturing activity.

U.S. economic activity in the manufacturing sector contracted in November for the 13th consecutive month, according to the latest release from the Institute for Supply Management (ISM).

The Manufacturing PMI registered 46.7% in November, unchanged from the 46.7% recorded in October.

“The overall economy continued in contraction for a second month after one month of weak expansion preceded by nine months of contraction and a 30-month period of expansion before that,” said Timothy R. Fiore, Chair of the Institute for Supply Management Manufacturing Business Survey Committee.

However, ISM’s December 2023 Semiannual Economic Forecast from last week is bullish in many ways, with positive expectations about manufacturing in 2024. Importantly, the more bullish responses and data for the manufacturing sector were collected before the Fed’s signal that rate cuts are coming next year.

Weak Europe

But economic prospects for Europe, especially for its largest economy, Germany, do not look so good.

Real gross domestic product (GDP) in Germany is likely to decline again slightly in the fourth quarter of 2023 due to weak demand in industry and construction, Bundesbank, the central bank, said in its monthly report on Monday.

If Q4 GDP falls after the drop in Q3, it would mean a technical recession for Europe’s biggest economy.

Business sentiment is also weakening, the Ifo data showed on Monday.

“In manufacturing, the Business Climate Index fell noticeably. Companies assessed their current business situation as significantly worse. Their expectations also grew more pessimistic. Energy-intensive industries are having a particularly tough time,” the ifo Institute said, commenting on Germany’s flailing business confidence.

Oil Flows Change As Shippers Avoid Red Sea Route

The flows of crude and refined products could change in the coming weeks as some of the largest companies in the oil and shipping industries have started to adjust operations to avoid transit through the Red Sea following daily attacks on commercial vessels near the Yemeni coast.

Since the EU embargo on Russian oil and products, volumes of diesel and crude oil sailing northbound in the Red Sea have jumped, which has boosted the importance of flows via the Red Sea, Jay Maroo, Head of Market Intelligence & Analysis (MENA) at Vortexa, said on Monday.

If vessels moved to alternative waypoints such as the Cape of Good Hope in Africa, the voyage duration on the main routes from the Middle East to Europe, from India to Europe, and from Russia to India and China would increase by between 58% and 129%, according to Vortexa. The biggest increase, 129%, in the time it takes for a cargo to arrive at its destination would be on the Middle East Gulf to Mediterranean route, which would take 39 days instead of 17 days, Vortexa says.    .

Source: Oilprice.com

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Analysts Say Oil Prices Unlikely To Hit $100 In 2024

Energy News Beat
OPEC+ faces record-breaking U.S. oil production and rising supply from other non-OPEC+ producers, including Brazil, Guyana, Canada, and Norway.
Barring a major geopolitical escalation resulting in a large supply outage, oil prices are unlikely to reach $100 a barrel in 2024.
Paul Sankey: Record-high U.S. oil production is a “huge problem” for OPEC+.

Surging non-OPEC+ oil production and significant storage space held by the OPEC+ group will continue to put downward pressure on crude oil prices next year, analysts say.

Barring a major geopolitical escalation resulting in a large supply outage—which cannot be discounted—, oil prices are unlikely to reach $100 a barrel in 2024 as American oil production and exports are rising faster and higher than expected, and market sentiment about demand is downbeat, especially for the first half of 2024.

With its latest announced cuts for the first quarter of 2024, the OPEC+ alliance is trying to keep tight control over the global oil supply. But the group faces record-breaking U.S. oil production and rising supply from other non-OPEC+ producers, including Brazil, Guyana, Canada, and Norway. Brazil has been invited to be part of OPEC+ starting in January 2024, but it has already said that it would not take part in any production cuts.

OPEC+ is trying to keep a floor under oil prices (at the expense of its market share), but it may not succeed in propping up prices too much. This is especially true if the group fails to extend the cuts beyond March 2024, analysts say.

The group’s production cuts “help defend a floor in oil prices, but more cuts equate to more spare capacity,” Stacey Morris, head of energy research with VettaFi, told MarketWatch.

“That dynamic arguably puts a lid on the upside for oil prices,” Morris added.

Warren Patterson, Head of Commodities strategy at ING, wrote in a note earlier this month that “given the scale of cuts we are seeing, OPEC is sitting on a substantial amount of spare capacity.”

OPEC, including Iran, has some 5.5 million barrels per day (bpd) of spare capacity, according to ING.

“This spare capacity should also offer some comfort to markets given that should we see significant price strength, one would expect this capacity to start to return to the market,” Patterson said.

At any rate, the oil market management from OPEC+ would be key to where prices will go next year, he noted.

ING sees Brent Crude trading in the low $80s early next year, while it forecasts Brent to average $91 per barrel over the second half of 2024, when the market will return to deficit.

However, non-OPEC+ supply is growing at a faster pace than previously forecast, led by record U.S. crude oil production, which continued to soar despite a flat or falling rig count compared to this time last year.

The United States is “now the global swing producer, not Saudi Arabia, and especially not Russia,” Robert Yawger, executive director for energy futures at Mizuho Securities USA, told MarketWatch’s Myra Saefong.

The United States is now on track to deliver a supply increase of 1.4 million bpd 2023, accounting for two-thirds of the 2.2 4 million bpd non-OPEC+ production growth this year, the International Energy Agency (IEA) said in its monthly report this week.

At the same time, OPEC+ production is set for a 400,000 bpd decline, which would reduce its market share to 51% in 2023 – the lowest since the bloc’s creation in 2016, the agency added.

Record-high U.S. oil production is a “huge problem” for OPEC+, Paul Sankey at Sankey Research told CNBC after the latest OPEC+ meeting at the end of November.

The solution for Saudi Arabia could be to just flush the soaring non-OPEC+ output out by flooding the market with crude and thus sinking oil prices to levels below the U.S. profitability threshold, Sankey said.

If OPEC+ were to unwind the cuts after March 2024, oil prices could crash by 30%-50% if most of the spare capacity comes online, Citigroup’s global head of commodities research, Max Layton, told Bloomberg TV this week.

“They can balance this market and keep these prices at $70 to $80 if they all work together,” Layton said.

If OPEC+ producers continue to work together and not choose to flood the market with oil to flush out the U.S. competition eating into their market share, they may have to continue a tight control on supply for the next few years, according to Rapidan Energy Group.

“For the next several years, at least, continually unified, vigilant, and effective OPEC+ supply management will be required to prevent a collapse in oil prices,” Rapidan said in a report this week carried by Bloomberg.

“While oil demand isn’t about to peak, neither is non-OPEC+ supply growth,”

Bob McNally, Rapidan’s founder and a former White House official, said.

“So OPEC+ has its work cut out for it over the next few years. But toward the end of the decade, a price boom will follow the bust. Buckle up.”

Source: Oilprice.com

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Woodside to work with Japanese firms on carbon capture and storage

Energy News Beat

Australian LNG player Woodside has signed a non-binding memorandum of understanding with four Japanese companies to enable studies of a potential carbon capture and storage (CCS) value chain between Japan and Australia.

Under the MoU, Woodside with Sumitomo Corporation, JFE Steel Corporation, Sumitomo Osaka Cement, and K Line will study the capture, storage and transportation of CO2 emissions from the Setouchi and Shikoku regions of Japan and the injection and storage of the CO2 at Australian storage sites.

According to Woodside, the memorandum reflects the demand for large-scale decarbonization solutions and highlights the unique geological advantages of Australia with subsurface characteristics that are highly suitable for large-scale CCS projects.

In September, Woodside signed a similar deal with Japan’s Kansai Electric Power as well as with Sumitomo, Toho Gas, and K Line.

Woodside and compatriot LNG player Santos recently confirmed that the two firms are in discussions regarding a potential merger.

The combination of the two firms would create a merged energy and LNG giant with a market value of about A$80 billion ($52.4 billion).

Speaking of Santos, the firm also signed this week a memorandum of understanding with Japan’s JX Nippon Oil & Gas Exploration Corporation (JX) and ENEOS.

Santos said it plans to expand the Moomba carbon capture and storage (CCS) project and transform the Cooper Basin into a “decarbonization and low-carbon fuels hub”.

The MoU seeks to jointly identify and define commercial and investment opportunities covering the potential importation of up to 5 Mtpa of CO2 by 2030, 10 Mtpa by 2035 and 20 Mtpa by 2040 from Japan to the Moomba CCS project, via either Port Bonython in South Australia or Gladstone in Queensland, it said.

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The post Woodside to work with Japanese firms on carbon capture and storage appeared first on Energy News Beat.