Saudi Arabia has cut oil prices again, after the OPEC+ and Russia consortium agreed to slash production by 10% to shore up prices. Saudi Aramco is now reportedly offering crude oil to its Asian customers — primarily China — at a heavy discount, with the underlying motive of capturing more market share from Russia, the US and the rest of OPEC’s members.
The news has caused Brent Crude to fall to around $30/barrel again, after a temporary high of $36/barrel two days ago.
Meanwhile, prices for US oil are yet to recover, and it is forcing several players to cease operations as the current retail price of around $21/barrel is too low for them to stay afloat. Reports suggest the US oil industry could wait out the Covid-19 emergency at $30/barrel, even if that meant laying off a majority of their personnel, but at current prices that is improbable. Output of natural gas from its shale fields is down as well over poor demand.
German carmakers urge EU to drop tighter emission cuts
Rattled by the coronavirus-induced drop in sales, German automakers have asked the government to back them in their demand for the EU to drop tighter emission limits on conventional cars. The limits would force automakers to produce cleaner cars that together would lower the EU’s automotive emissions, but they insist that “now is not the time”.
Environmental Action Germany has rebuked the demand, saying that the auto industry should not use the pandemic as an excuse to “sabotage EU climate goals”. However, similar expectations may be voiced from car manufacturers in other markets, such as Australia — where passenger vehicle sales are down 18% y-o-y, and India, which is down 52%.
California re-opens fracking despite governor’s pledges
The state of California has issued licenses to 24 wells and effectively re-introduced fracking after a nine-month moratorium. The licenses were issued to a joint venture between Shell and Exxon Mobil despite the state’s governor, Gavin Newsom, having promised to ban fracking altogether.
The decision is very likely to be contested in court, and its opposers may find support in UK’s legislation to ban the practice after studies showed the wells destabilised the ground underneath and made regions more vulnerable to damage from earthquakes.