By Adedapo Adesanya

Crude oil prices went up on Wednesday after the European Union (EU) agreed to an additional round of sanctions threatening Russian oil flows that could tighten global crude supplies.

During the session, Brent crude futures jumped by $1.33 or 1.84 per cent to $73.52 a barrel and the US West Texas Intermediate (WTI) crude futures rose by $1.70 or 2.48 per cent to $70.29 per barrel.

EU ambassadors agreed on a 15th package of sanctions on Russia over its war against Ukraine, targeting its shadow tanker fleet and Chinese firms making drones for the country.

The sanctions would target vessels from third countries supporting Russia’s war in Ukraine and add more individuals and entities to the sanctions list. It will not be adopted until after foreign ministers approve the package on Monday.

The shadow fleet has aided Russia in bypassing the $60 per barrel price cap imposed by the G7 on Russian seaborne crude oil in 2022 and has helped keep Russian oil flowing.

Prices were supported by the Energy Information Administration (EIA) which reported an estimated inventory decline of 1.4 million barrels for the week to December 6. In fuels, however, the EIA estimated sizable builds.

The crude oil inventory figure compares with a draw of 5.1 million barrels for the previous week that pushed prices higher for a while but the gains soon got erased by weak global demand growth prospects.

A day before the EIA, the American Petroleum Institute (API) had estimated inventory changes at a positive 499,000 barrels for the week to December 6.

Meanwhile, on Wednesday, the Organisation of the Petroleum Exporting Countries (OPEC) cut its 2024 global oil demand growth forecast for a fifth straight month and by the largest amount.

In its December report, the cartel expects 2024 global oil demand to rise by 1.61 million barrels per day, down from 1.82 million barrels per day last month.

OPEC also cut its 2025 growth estimate to 1.45 million barrels per day from 1.54 million barrels per day.

The 210,000 barrels per day cut in the 2024 figure is the largest of the five reductions OPEC has made in its monthly reports since August. In July, OPEC had expected world demand to rise by 2.25 million barrels per day.

Weak demand, particularly in top importer China, and non-OPEC+ supply growth were two factors behind the move.

By Adedapo Adesanya

The Organisation of the Petroleum Exporting Countries (OPEC) has once again trimmed its 2024 and 2025 oil demand growth forecasts.

The bloc made this in its latest monthly oil market report for December 2024.

The 2024 world oil demand growth forecast is now put at 1.61 million barrels per day from the previous 1.82 million barrels per day.

For 2025, OPEC says the world oil demand growth forecast is now at 1.45 million barrels per day, which is 900,000 barrels per day lower than the 1.54 million barrels per day earlier quoted.

On the changes, the group said that the downgrade for this year owes to more bearish data received in the third quarter of 2024 while the projections for next year relate to the potential impact that will arise from US tariffs.

The oil cartel had kept the 2024 outlook unchanged until August, a view it had first taken in July 2023.

OPEC and its wider group of allies known as OPEC+ earlier this month delayed its plan to start raising output until April 2025 against a backdrop of falling prices.

Eight OPEC+ member countries – Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman – decided to extend additional crude oil production cuts adopted in April 2023 and November 2023, due to weak demand and booming production outside the group.

In April 2023, these OPEC+ countries decided to reduce their oil production by over 1.65 million barrels per day as of May 2023 until the end of 2023. These production cuts were later extended to the end of 2024 and will now be extended until the end of December 2026.

In addition, in November 2023, these producers had agreed to voluntary output cuts totalling about 2.2 million barrels per day for the first quarter of 2024, in order to support prices and stabilise the market.

These additional production cuts were extended to the end of 2024 and will now be extended to the end of March 2025; they will then be gradually phased out on a monthly basis until the end of September 2026.

Members have made a series of deep output cuts since late 2022.

They are currently cutting output by a total of 5.86 million barrels per day, or about 5.7 per cent of global demand. Russia also announced plans to reduce its production by an extra 471,000 barrels per day in June 2024.

By Aduragbemi Omiyale

A minority equity stake in Chappal Energies Mauritius Limited has been acquired by a Nigerian energy firm, Aradel Holdings Plc.

This deal came a few days after Chappal Energies purchased a 53.85 per cent equity stake in Equinor Nigeria Energy Company Limited (ENEC).

Chappal Energies went into the deal with Equinor to take part in the oil and gas lease OML 128, including the unitised 20.21 per cent stake in the Agbami oil field, operated by Chevron.

Since production started in 2008, the Agbami field has produced more than one billion barrels of oil, creating value for Nigerian society and various stakeholders.

As part of the deal, Chappal will assume the operatorship of OML 129, which includes several significant prospects and undeveloped discoveries (Nnwa, Bilah and Sehki).

The Nnwa discovery is part of the giant Nnwa-Doro field, a major gas resource with significant potential to deliver value for Nigeria.

In a separate transaction, on July 17, 2024, Chappal and Total Energies sealed an SPA for the acquisition by Chappal of 10 per cent of the SPDC JV.

The relevant parties to this transaction are working towards closing out this transaction and Ministerial Approval and NNPC consent to accede to the Joint Operating Agreement have been obtained.

“This acquisition is in line with diversifying our asset base, deepening our gas competencies and gaining access to offshore basins using low-risk approaches.

“We recognise the strategic role of gas in Nigeria’s energy future and are happy to expand our equity holding in this critical resource.

“We are committed to the cause of developing the significant value inherent in the assets, which will be extremely beneficial to the country.

“Aradel hopes to bring its proven execution competencies to bear in supporting Chappal’s development of these opportunities,” the chief executive of Aradel Holdings, Mr Adegbite Falade, stated.