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By David Gaffen, Editor, Energy Markets

Hello Power Up readers! The oil market’s rally continues apace as economic growth stabilizes in various parts of the world and the Saudis suggest they will maintain recent price cuts, though that’s still up in the air. But let’s look at what’s going on in South America first. 

Today’s top headlines:

• Oil dips after sustained rally bolstered by supply cuts
• Aramco boosts dividend as Q2 profit drops by 38%
• China’s Yanchang seen doubling Russian oil purchases

Herons on the Amazon. Reuters/Ueslei Marcelino

Eight different Amazon rainforest nations will be meeting on Tuesday for the first time in 14 years, and oil drilling will be on their mind, as Jake Spring reports here. The Amazon Cooperation Treaty Organization (ACTO) will convene heads of state from Bolivia, Brazil, Colombia, Ecuador, Guyana, Peru, Suriname and Venezuela for two days in northern Brazil, where they talk a number of subjects – but drilling and deforestation are among the hottest topics. 

Some, like Colombian President Gustavo Petro, want the Amazon to be off-limits to new oil development, after Brazil recently found a huge offshore oil find near the mouth of the Amazon River. Brazil counters that Colombia, unlike itself and Peru, does not have oil reserves in the Amazon. The debate over drilling near the mouth of the Amazon has sparked heavy infighting in Brazil’s government between environmentalists who want to restrict such activity, and advocates for regional development. 

The Saudis will keep production restrained. 

An OPEC+ ministerial panel on Friday maintained the group’s current oil output policy, as Maha El Dahan, Ahmad Ghaddar and Alex Lawler report here. The group’s monitoring committee can call a full meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known as OPEC+, if it feels it is warranted. 

Right now, prices are on the move, up 14% in July, after supply tightened up. On Thursday, OPEC leader Saudi Arabia said it would extend its cut of 1 million barrels per day (bpd) for another month to include September, and could keep that going as well if it wanted as oil prices hit highs not seen since April. Saudi Aramco, the largest state-run oil company, said profit fell by 38%, which isn’t surprising given the drop in oil prices since last year. 

Southern Europe has been expanding solar capacity. 

Solar power generation has been steadily climbing as part of the energy mix in Europe, and its use helped various countries in southern Europe during the recent heat wave – providing power for air conditioning as temperatures broke records, as Kate Abnett and Susanna Twidale report here.  

“The very significant growth in solar basically compensates for the peaks that are caused by air conditioning,” Kristian Ruby, secretary general of electricity industry group Eurelectric, said of the situation in Spain. That country, along with Greece and Italy, have been installing solar panels to boost output. How well did it work? On the island of Sicily, cooling demand hit a peak in late July, and nearly half of that excess demand was covered by solar, Refinitiv data shows.  

That’s a Siemens wind turbine at the port of Arinaga on Gran Canaria Island in Spain. Reuters/Borja Suarez

Siemens Energy on Monday posted a $2.4 billion charge at its wind turbine unit – not as bad as some expected, but enough to raise worries about that business, as Christoph Steitz and Alexander Hubner report here. The company back in June detailed big problems at its wind turbine unit only weeks after it fully acquired that business.  

Siemens makes giant wind turbines for offshore projects, but the company has had to cut its sales outlook and said profits would come in lower than expected due to a series of problems that include faulty gears and issues with rotor blades.  

“Are we going to let hydrocarbons be explored in the Amazon rainforest? To deliver them as exploration blocks? Is there wealth there or is there the death of humanity?” 

Colombian President Gustavo Petro in a recent speech

Crude prices in Europe and Asia are dropping due to a surge in U.S. crude exports, which continue to rise every year, as Muyu Xu, Alex Lawler and Arathy Somasekhar report here. So far this year U.S. crude exports have come in north of 4 million barrels per day – a level once thought impossible due to port capacity – and that’s capped the price of Brent crude in various markets.  

The big supply out of the U.S. is offsetting to some extent the loss of supply after Saudi Arabia cut output in July. While many thought U.S. shale was past its peak – and it has been slower to ramp up as oil rebounded than in previous bull markets – output from the world’s largest economy is closing in on the all-time record of nearly 13 million bpd. “There is more and more (West Texas) production flooding the global markets,” said Adi Imsirovic, director at Surrey Clean Energy, who formerly headed global oil trading at Gazprom Marketing and Trading.   

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