1. Nigeria and Libya are getting pressure to cap output when production stabilizes.
Until now Nigeria and Libya have been exempt from the previous OPEC supply cuts, but this may change with an upcoming meeting in St Petersburg, Russia. OPEC and Non- producers are gathering once again on Monday to discuss the future of their pact to curb output by 1.8 million bpd through the end of March 2018. With pressure from Russian Energy Minister Alexander Novak, who is on record stating that Libya and Nigeria should cap output when their output stabilizes, many are wondering if the committee will recommend a conditional cap on Nigerian and Libyan oil production.
2. U.S. threatens sanctions against Venezuela.
The Trump Administration has warned that it will take “swift economic actions” if the Venezuelan government continues with a July 30th move to rewrite the constitution consolidating power under President Nicolas Maduro. Although we don’t have exact details of what the sanctions would entail, the prevailing thought is that the threat is directed at state-owned oil company PDVSA, the government’s main source of revenue. Obviously, a Venezuelan oil ban would severely cripple an already chaotic Venezuela. The country is currently in shambles and this ban would continue the downward spiral. Additionally, it will add further uncertainty to an already unstable global oil market.
3. Tensions continue to rise as the Philippines resumes drilling in South China Sea.
Even after the world court ruled China lacked a legal basis for its ownership claims in the South China Sea, China continues to cause problems. Over two years ago, Philippine energy officials halted drilling for oil and natural gas in a sensitive part of the Sea and entered arbitration with China over who has the rights to an 8,866 square-kilometer island (Reed Bank) 80 kilometers from the Philippine island of Palawan.
However in a bold move, Now the Philippines is ready to let drilling resume. The drilling would surely infuriate China, which believes more than 90% of the sea including Reed Bank to be its own – despite the July 2016 arbitration verdict saying otherwise. This move by the Philippines will force China to make a choice: Put up a fight and risk elevated tensions that may lead to the United States getting involved or losing its claim on the island. China’s 19th Communist Party congress will most likely take place in November, and those meetings will reveal a great deal in regard to China’s position.