Kuwait: OPEC Has No Choice But to Keep Output Unchanged

Rig Zone ^ | March 19, 2015 | Reuters

[thackney]

OPEC has no choice but to keep its market share and shun oil output cuts, Kuwait's oil minister said on Thursday, reiterating the view from the emirate that the group will hold its course when it meets next in June.

"Of course we are concerned because the price of oil will affect our budget ... within OPEC we don't have any other choice than keeping the ceiling of production as it is because we don't want to lose our share in the market," Ali al-Omair told reporters in Kuwait city.

Many OPEC oil ministers, including Saudi Arabia's Ali al-Naimi, have defended the group's November decision not to cut production but instead defend market share and curtail the output of more expensive producers such as the United States.

The accord pushed oil prices below $50 per barrel, extending a sharp decline that began in June amid a global glut of crude and weakening demand.

Since the oil price collapse, OPEC officials have said they wanted non-OPEC producers to cooperate with the group but those attempts have made little progress....

[thackney]

excerpted for Reuters

[txrefugee]

Why are we buying OPEC oil when we have no more storage for all our oil?
Cut off all imports of their oil, which means they would not be able to fund Islamic militants all over the world who want to kill us. No more oil from OPEC!

[ConservativeMind]

The concept of “maintaining market share” has no real relevance in a commodity market. The reality behind the statement is that members can't afford to reduce output (they need the income) and they can't afford to raise it (or they will change the proportionate amount of income othe OPEC nations are making at the current rate of oil utilization, as this would spark a further price war no OPEC nation would profit from).

Most oil-producing countries can afford at least a few years of low prices, anyway.

We are so very fortunate that the US has broken OPEC’s prior hold on pricing.

[ConservativeMind]

Refineries are optimized for certain types of crude processing, so there’s always an opportunity to cross borders with oil.

[thackney]

Two reasons, we have a surplus of light sweet oil, those imports have dropped down to zero in the Gulf Coast region while most of our new oil production growth was light sweet. Many of our refineries are optimized to use heavy sour crude oil that is cheaper and contains more BTUs per barrel.

Secondly, we don’t have the transportation infrastructure to move all the oil produced to our coastal refineries. The Jones Act limits us from moving oil from Texas to New Jersey or California via tankers, making it cheaper for a New Jersey refinery to buy oil across the Atlantic than down our coastlines.

[Abathar]

I believe that’s why Venezuela hasn’t been too obnoxious to us, we can process their sour where many countries more sympathetic to them aren’t equipped to do so.

[woodbutcher1963]

“The Jones Act limits us from moving oil from Texas to New Jersey or California via tankers, making it cheaper for a New Jersey refinery to buy oil across the Atlantic than down our coastlines.”

I did not know that. I knew the Jones Act required US flag vessels to abide by US laws and pay scales. This is why all cruise ships fly foreign flags.
However, limiting our oil to ship within our own country just does not make sense. Again, who wrote this law, the Vanderbilts Lawyers?

[thackney]

IIRC, You cannot move cargo from a US port to a US port unless built in the US, flagged in the US, crewed by US, etc...

Not a lot of tankers built in the US.

[woodbutcher1963]

So, does this mean all the tankers that ship from Alaska are US flagged if they are going to the lower 48?

[SeaHawkFan]

That’s the same reason cruise ships departing U.S. ports always make a stop in another country during the trip. For Alaska cruises, that usually means a 5-8 hour stop in Victoria or Vancouver, Canada.

[thackney]

US built, flagged and crewed.

more at:

https://rbnenergy.com/rock-the-boat-don-t-rock-the-boat-crude-by-water-and-the-jones-act

[woodbutcher1963]

Unions

[vette6387]

“So, does this mean all the tankers that ship from Alaska are US flagged if they are going to the lower 48?”

Well the one’s I see docked in Martinez and Benicia California are not US Flagged ( unless the one’s that say Monrovia, are actually registered in Monrovia, CA). And the same ships are there often enough that they must be coming down from Alaska.