The global energy sector in 2018 largely featured the U.S.’ decision to impose sanctions against Iran, the Organization of Petroleum Exporting Countries (OPEC)'s decision to lower oil output, extensive oil price fluctuations and climate concerns.
In May, U.S. President Donald Trump withdrew the U.S. from a nuclear deal, which was signed in 2015 between Iran and the P5 1 group of nations (the five permanent members of the UN Security Council plus Germany).
In late July, Trump said he was ready to hold talks with his Iranian counterpart Hassan Rouhani without preconditions, however, parties had no official meetings.
On Aug. 6, U.S. Secretary of State Mike Pompeo said Washington would enforce sanctions against Iran claiming it was in contravention of the deal that placed restrictions on its nuclear program in exchange for billions of dollars in sanctions relief.
Following the U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA), the first phase of U.S. sanctions against Iran hit the automotive, banking, and mining sectors in August.
The second phase of sanctions, targeting Iran’s energy sector, shipbuilding, shipping and financial sectors, came into effect on Nov 5.
OPEC agreed in November 2016 to reduce 1.2 million barrels per day (bpd) from its output at that time.
In December 2016, Russia and non-OPEC producers said they would reduce their production by 600,000 bpd. The agreement was later extended until the end of 2018.
On June 15 this year, OPEC announced its decision to increase its crude production by reducing the level of compliance from its previously agreed quotas from more than 150 percent in May to 100 percent as of July 1.
When the cartel met with Russia and other non-OPEC countries on June 16, they agreed to reduce their compliance levels to 100 percent.
On June 23, OPEC and non-OPEC countries announced their adherence to the overall conformity level of 100 percent as of July 1, which added around 1 million barrels a day to global oil supply.
OPEC said then that participating countries would strive to adhere to the overall conformity level for the remaining duration of the Declaration of Cooperation (DOC) and for the Joint OPEC and Non-OPEC Ministerial Monitoring Committee (JMMC) who were tasked with monitoring and reporting back the overall conformity level to the OPEC and non-OPEC Ministerial Meeting.
A press release from the organization on June 23 said "the member countries have exceeded the required level of conformity that had reached 152 percent in May 2018".
At the beginning of November, OPEC and its allies announced crude output cuts of 1.2 million barrels per day (mbpd) to balance the global oil market. Members agreed the cartel would curb production by 800,000 mbpd, while non-OPEC oil producers, including Russia, would cut output by 400,000 bpd.
The supply cuts were based on production levels of participating countries in October 2018. The cuts will take effect in January 2019 for six months, according to a joint communique from the cartel and its allies, dubbed as OPEC following the Vienna meeting in early December.
The deal and its impact on the market will be reviewed in April 2019, when OPEC meet to decide on their strategy for July onwards.
At the beginning of 2018, global oil prices were recorded at around $67 per barrel.
Crude oil prices on Jan. 4 reached their highest level in two and a half years amid tensions in Iran and with the ongoing support of OPEC's production cut agreement. After opening the day at $67.85 per barrel, Brent gained 0.58 percent to reach as high as $68.25 per barrel, reaching its highest level since May 13, 2015.
In mid-January, Brent hit $70 per barrel, the highest level in three years supported by OPEC's production cut agreement.
In late April, Trump slammed OPEC and complained the cartel was keeping crude oil prices high.
"Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea. Oil prices are artificially Very High! No good and will not be accepted!" Trump wrote on Twitter.
Four days later after Trump's tweet, Brent hit the $75 per barrel mark.
At the beginning of May, Brent saw a rise due to Trump's decision to pull the U.S. out of the Iranian nuclear deal. On May 8, Brent crude hit $77.18 per barrel at 10.35 am Turkish local time while WTI saw prices of $71.17 per barrel.
On Oct. 3, Brent oil hit a yearly high of $86.74 per barrel, but plummeted to $57.50 on Nov 29.
During the period from May to December, oil prices were highly influenced by the U.S. decision to impose sanctions on Iran, along with OPEC's move to rebalance the market and with escalating trade tensions between the U.S. and China.
On Dec 13, crude oil prices showed gains with the easing of trade tensions between the U.S. and China providing market optimism, while crude oil inventories in the U.S. experienced declines.
The price of international benchmark Brent crude was trading at $60.48 per barrel at 0645 GMT on Dec. 13 with a daily gain of 0.5 percent, after it ended Wednesday, Dec. 12, at $60.15 a barrel.
The United Nations (UN) Climate Change Conference took place between Dec. 3 and 14 in Katowice in Poland.
During the conference, the UN’s top climate official called for urgent action on climate and warned against the catastrophic consequences of global warming. In the conference, climate impacts on the displacement of a large number of people were widely discussed.
Climate change is expected to increase the number of migrants that live outside their country of origin, the number of which was registered as over 258 million on Dec. 6, according to the UN data.
Climate change that impacts large movements of people, include increasingly long heatwaves, droughts and sea-level rises that make land uninhabitable.
The COP meeting saw a set of recommendations drawn up to help countries cope with the displacement of people as a result of climate change.
On Dec. 3, Qatar announced its decision to leave the cartel after 57 years, but targets to increase its liquefied natural gas (LNG) production.
The move could be a point-of-no-return in the medium-term for Qatar, given its strained relations with Saudi-led countries in the Middle East.
Qatar has been the world's biggest LNG exporter every year since 2006, having a 30 percent share in the global LNG market, according to British Petroleum's Statistical Review of World Energy published annually.
Having the third largest gas reserves in the world, after Russia and Iran, Qatar plans to increase its LNG production capacity per annum from 77 million tons to 110 million tons, Qatar Energy Minister Saad Sherida Al Kaabi said on Sept. 26.
Qatar's departure from OPEC is unlikely to have much impact on the cartel's production, given that it only has a small output share in the organization.
The country's oil production was 609,000 barrels per day in October, according to OPEC's Monthly Oil Market report in November. This constituted 1.8 percent of OPEC's total production in October, which stood at 32.9 million bpd, the report showed.
On May 23, 2017, the crisis between Qatar and Saudi Arabia, the United Arab Emirates (UAE), Bahrain, Egypt, and Yemen erupted when Qatar’s official News Agency website was reportedly hacked by an unknown group that allegedly posted false remarks -- attributed to Qatari Emir Tamim bin Hamad al-Thani -- about U.S. foreign policy and Iran.
The same day, the Twitter account of Qatar’s foreign minister featured a statement urging the ambassadors of Saudi Arabia, Egypt, Kuwait, Bahrain and the UAE to leave Qatar within 24 hours.
On June 2, 2017, the UAE, Saudi Arabia, Bahrain, Egypt and Yemen all abruptly announced their decision to sever diplomatic relations with Qatar, citing “national security” concerns. These countries, excluding Yemen, threatened to impose further sanctions on Doha if it failed to accept a long list of demands including the closure of the Qatar-funded Al Jazeera television.
In September, Qatar signed an agreement with the U.K. to purchase 24 Eurofighter Typhoon fighter jets, according to Qatar's Defense Ministry.
On Nov. 7, 2017, Qatar signed contracts worth €12 billion ($14.15 billion) with French companies during a one-day visit by French President Emmanuel Macron amid a continuing crisis between Doha and its Gulf neighbors. The contracts covered defense, armaments, the operation and maintenance of metros and tramways, and soil pollution treatment.
Qatar denies the accusations levied against it and described attempts to diplomatically isolate it as a violation of international law and its national sovereignty.
The world's biggest LNG supplier is also forging ahead with a partnership with ExxonMobil for the $1.3 billion Golden Pass LNG terminal in Texas, which is set to start LNG production from shale gas in five years.
