OPEC has finally met, and as most expected, the cartel agreed that any country within the group that has space capacity will be able to boost oil production, with Saudi Arabia and Russia arguably standing to gain the most.

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OPEC issued a communique on Friday that called on a return to 100 percent compliance for the group, down from 152 percent in May. The announcement deferred country-specific allocations, likely because they could not agree on the details. The decision likely means that any country with spare capacity will be able to boost production. In practice, Saudi Arabia and Russia will carry the lion’s share. How individual countries make decisions about how much to produce, while still trying to stay below a collective cap, opens up a lot of uncertainty.

Oil up on vague outcome. Oil prices moved up on Friday morning, on expectations that the result from the OPEC+ meeting won’t lead to a supply glut. In recent days, there seemed to be a bit of convergence on a plan to boost production, perhaps by around 600,000 bpd. That amount would merely offset the declines from Venezuela over the past year, and would not plug the entire supply deficit facing the market. “The market caught up a little in terms of realizing that the rumored increase was less than what is necessary to balance the market,” Emily Ashford, director of energy research at Standard Chartered, told the WSJ. “Any increase in production will come at the expense of spare capacity so that leaves the market much more vulnerable to future supply shocks,” she added.

OPEC eyed 1 mb/d increase, but couldn’t agree. OPEC’s technical committee recommended a supply increase of about 1 million barrels per day, although press reports widely noted that such an increase would likely only be nominal, and actual barrels put onto the market would reach only about 600,000 bpd because several countries have no ability to boost output. The recommendation came even as Iranian oil minister Bijan Zanganeh walked out of a meeting on Thursday night, although he met with his Saudi counterpart Friday morning. The discord likely led to the vague decision on 100 percent compliance, rather than on country-specific increases. Related: OPEC Edges Closer To Production Agreement

Oil and gas methane emissions higher than expected. A new study finds that the oil and gas industry might be leaking more methane from operations than is commonly thought. The study puts the methane leakage rate at about 2.3 percent of total production, or 60 percent higher than the EPA estimates. The difference is the equivalent of heating 10 million homes, and it also cancels out some of the net climate benefit that comes from switching from coal to gas for electricity.

EPA to put biofuels obligations onto large refiners. In a sign of retreat after outrage from the biofuels and corn ethanol industries, the EPA is reportedly set to propose putting biofuels obligations onto large refiners. The agency had issued a series of waivers to smaller refiners, allowing them to get out of buying and blending biofuels, to the anger of the ethanol industry. After the political fallout, the EPA seems to be reversing course, but will shift those requirements onto large refiners. The move is a sign of the political power of the corn lobby, as well as Midwestern Republicans in Congress.

Kimmeridge exits Carrizo, after activist campaign. Activist private equity group Kimmeridge Energy Management sold its position in Carrizo Oil & Gas (NASDAQ: CRZO) this week after a campaign to try to change the company’s strategy. Kimmeridge tried to get Carrizo to sell its oil fields in the Eagle Ford and to shift the company’s focus to the Permian. However, Carrizo resisted and Kimmeridge ultimately decided to sell its 8.1 percent stake. Maintaining Eagle Ford assets turned out to be a winner, now that Permian prices have plunged because of pipeline constraints.

U.S. natural gas output to soar 60 percent. A new report from IHS finds that U.S. natural gas production could jump 60 percent over the next 20 years, a finding that suggests the shale gas revolution has decades of running room. Dry gas production could hit 81 billion cubic feet per day this year, but rise to 118 bcf/d by 2037. Natural gas is expected to capture about 50 percent of the electricity market by 2040, up from about a third today.

Libyan forces retake oil terminal. Libya briefly saw the outage of about 450,000 bpd of supply because of attacks from militants, combined with the destruction of several oil storage tanks. Reuters reports that East Libyan forces have retaken the shuttered oil ports of Es Sider and Ras Lanuf, the two largest in the country. The three storage tanks that were destroyed will take years to repair. “Libyan production is very low but we are going to resume very soon,” Mustafa Sanalla, chairman of Libya’s National Oil Corp., told reporters in Vienna. “After a couple of days we will resume, we start our operations hopefully.”

Related: Permian Bottlenecks Begin To Bite

Permian DUCs to rise. Pipeline bottlenecks are forcing Permian drillers to leave more and more wells uncompleted. The drilled but uncompleted wells (DUCs) has more than doubled from the start of 2017, and should continue to rise as Permian pipelines fill up. “Some companies will have to shut in production, some companies will move rigs away, and some companies will be able to continue growing because they have firm transportation,” Pioneer Natural Resources (NYSE: PXD) CEO Scott Sheffield said.

Corpus Christi port receives funding for upgrade. The Port of Corpus Christi approved $217 million for upgrades to equip the facility to handle large oil tankers. The 1-million-barrel Suezmax and the 2-million-barrel VLCCs can only partially load at the facility right now. The upgrade will expand the port’s – and the country’s – export capacity.

By Tom Kool for Oilprice.com

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