Oil, Gas, And Fracking News Reads 21May 2018 – Part 2

Written by rjs, MarketWatch 666

Here are some more selected news articles about the oil and gas industry from the week ended 20 May 2018. Go here for Part 1.

This will be a feature at Global Economic Intersection every Tuesday evening.

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UAE state oil giant ADNOC plans to invest $45 bln in downstream expansion (Reuters) – Abu Dhabi National Oil Company (ADNOC) plans to invest $45 billion over the next five years to expand its refining and petrochemicals operations, it said on Sunday. Striving to become a global player in the downstream sector, the state oil giant wants to double its refining capacity and triple petrochemicals output potential by 2025 as it looks to capture new growth markets, ADNOC’s Chief Executive Sultan al-Jaber told Reuters on Saturday. On Sunday al-Jaber presented ADNOC’s downstream expansion strategy at an industry conference in Abu Dhabi, alongside CEOs of oil majors such as BP, Total and Eni , which have secured long-term oil production deals in the United Arab Emirates, a key Gulf OPEC member. The centrepiece of ADNOC’s strategy is the Ruwais industrial complex, which ADNOC wants to turn into the largest integrated refining and petrochemicals complex in the world, al-Jaber said at the conference. ADNOC plans to expand refining and petrochemical operations at Ruwais by adding a third refinery to boost capacity by 600,000 barrels per day (bpd) by 2025, lifting total refining potential to 1.5 million bpd. “We are extending an invitation to existing and new partners to join with us in building a world-leading refining and petrochemicals complex and manufacturing ecosystem here in Ruwais,” al-Jaber said. The company, a major Middle East producer that pumps about 3 million bpd, will also make overseas investments to secure access to growth markets, it said on Sunday.

UAE expects next OPEC meeting to focus on inventory not sanctions (Reuters) – OPEC is more focused on identifying the right level of oil inventory at its next meeting than the impact on supplies of new U.S. sanctions on Iran, the United Arab Emirates said. President Donald Trump said last week that the United States was exiting an international nuclear deal with Iran and would impose new sanctions on OPEC’s third-largest producer. Asked on Sunday about oil supply worries as a result of the sanctions UAE energy minister Suhail bin Mohammed al-Mazroui told reporters: “That’s not what we are concerned about now”. “What we are concerned about in the next (OPEC) meeting is what is the right level of inventory that we should see, and (how) can we put this group together for longer,” he said. OPEC has a self-imposed goal of bringing inventories in industrialized countries down to their five-year average. The exporting group needs to identify that inventory target in June to gauge the success of the deal, OPEC officials have said. A decline in Iranian oil exports would add upward pressure on prices, which have already gained this year due to a global supply cut deal between OPEC and non-OPEC producers. Brent crude rose further after Trump’s announcement on Tuesday and settled at $77.12 on Friday. OPEC is set to meet in June to set oil policy together with non-OPEC producers participating in the supply cut deal. Mazroui said there was no reason to worry about supply, adding that this was not the first time an OPEC member had been in such a situation. “We managed to solve the supply issue but we still believe we have the buffer (in oil supplies)… We will meet in June to discuss it,” he said. “If history tells us, (when) this happens the whole organization will get together and they can find a solution.”

With glut almost gone, OPEC still cuts more than oil pact demands(Reuters) – A global oil glut has been virtually eliminated, figures published by OPEC showed on Monday, thanks to an OPEC-led pact to cut supplies that has been in place since January 2017 and due to rising global demand. Despite this, OPEC’s latest report said producers were cutting more than required under the deal, while producers not party to the agreement, such as U.S. shale companies, were starting to face constraints on future output. Saudi Arabia, the world’s biggest oil exporter and de facto leader of the Organization of the Petroleum Exporting Countries, told OPEC it cut output in April to its lowest level since the supply deal began in January 2017. The OPEC report said oil inventories in OECD industrialized nations in March fell to 9 million barrels above the five-year average, down from 340 million barrels above the average in January 2017. “The oil market was underpinned in April by renewed geopolitical issues, tightening product inventories and robust global demand,” OPEC said in its report. The deal between OPEC, Russia and other non-OPEC producers has helped oil prices LCOc1 rise 40 percent since it took effect. Oil reached $78.28 a barrel on Monday, the highest since November 2014, after the OPEC report was published. The main goal of the supply deal was to reduce excess oil stocks to the five-year average. But oil ministers have since said other metrics should be considered such as oil industry investment, suggesting they are in no hurry to end supply cuts. Indeed, the report showed OPEC for now is cutting more supply than the group has pledged under the pact. OPEC output rose by just 12,000 barrels per day (bpd) to 31.93 million bpd in April, according to figures OPEC collects from secondary sources. That is roughly 800,000 bpd less than the amount OPEC says the world needs from the group this year. Figures reported directly from OPEC members showed even deeper declines in production. Venezuela, whose output has plunged due to an economic crisis, told OPEC its production fell to 1.505 million bpd in April, believed to be the lowest in decades. Top exporter Saudi Arabia told OPEC it cut output by 39,000 bpd to 9.868 million bpd, which is the lowest since the supply cut deal began, based on figures Riyadh reports to the group.

Analysts: Risk of OPEC, NOPEC Output Deal Compliance Slippage Increases – The OPEC, non-OPEC production cut deal will hold in its current form until December 2018, but the risk of compliance slippage has materially increased with U.S. President Trump’s decision to withdraw from the Iranian nuclear accord.That is the view of oil and gas analysts at BMI Research, who said that the US’ decision to end all nuclear-related sanctions waivers for Iran would smooth the re-entry of cut OPEC, non-OPEC barrels to market in 2019.“Crucially, it will allow OPEC and Russia to shift their narratives on production from restraint to growth, without derailing the global recovery in oil prices. Key producers can frame increases in their output as a response to any (perceived) gap in the market created by the barrels lost from Iran,” the analysts said in a brief report sent to Rigzone.BMI said it was unclear how far Iranian exports would be impacted by the withdrawal but said its current forecast is for a 500,000 barrel per day (bpd) year on year decline in crude and condensate exports for 2019. “The forecast 500,000 bpd drop in exports is dwarfed by the volumes currently being held out of the market by participants in the OPEC, non-OPEC production cut deal. The volume cut has averaged 1.32 million bpd over the life of the deal and stood at 1.92 million bpd as of March,” BMI analysts said.

If Saudi Arabia decides to increase oil production it could kill OPEC – As has been widely discussed in the aftermath of President Trump’s decision to withdraw from the Iran nuclear deal, the return of sanctions on Iran could disrupt oil shipments, with estimates ranging from essentially nothing to as much as 1 million barrels per day of Iranian supply going offline. But the decision also could put an end to the OPEC agreement. Saudi Arabia could be the biggest beneficiary of Trump’s decision, not just because from a geopolitical perspective (Saudi Arabia has long wanted the U.S. to confront Iran), but because any decline in Iranian supply will push up prices, dealing a financial windfall to Riyadh without any sacrifice. Saudi Arabia needs higher oil prices to fill budget gaps, and it also wants to ratchet up prices ahead of the Aramco IPO. Just as with Venezuela’s plunge in output, any unexpected outage in Iran will be a boon for Saudi Arabia.There seems to be some sort of agreement between the U.S. and Saudi Arabia that if Washington takes the fight to Iran, Saudi Arabia would step in to prevent a crude oil price spike, a perennial problem for U.S. politicians. U.S. Secretary of Treasury Steven Mnuchin said on Tuesday that he does not expect an increase in oil prices because “we have had conversations with various parties … that would be willing to increase oil supply.” He omitted which parties he was referring to, but it is safe to say that he was talking about Saudi Arabia.But if Saudi Arabia ramps up output, it would essentially have to back out of the OPEC agreement. Any unilateral increase in supply would violate the spirit of the pact, and would likely lead to less restraint from other members. Recognizing the risk here, a source told the FT on Wednesday that Saudi Arabia would not increase supply on its own, and would instead work with OPEC and Russia to coordinate their action.

OPEC says global upstream oil investment outside US needs to pick up –OPEC Monday said it is concerned about a lack of upstream investment in the oil industry outside of the US despite forecasting that the increase in 2018 non-OPEC crude supply would outpace global demand growth. In its closely watched monthly oil market report that largely kept its fundamental projections steady from April, OPEC said non-OPEC spending in 2017 to bring new projects online was down 42% from 2014. Related feature — Iran Sanctions: Global Energy Implications It would have been lower without the contributions of US tight oil companies, who raised investment by more than 42% year-on-year in 2017, OPEC said. “Timely spending on project implementation is a key concern,” OPEC said, which in recent weeks has indicated it will continue with its output cut agreement — and maybe even extend it past its expiry at the end of 2018 — to encourage more upstream spending despite tightening fundamentals. OPEC has said new projects will be needed to fill a potential supply gap in the coming years, with demand expected to be robust. The report comes just over a month from OPEC’s next ministerial meeting, June 22, in Vienna. The output cut agreement, which went into force in January 2017 after more than two years of a bruising market share battle, commits OPEC and 10 non-OPEC producers, led by Russia, to slash 1.8 million b/d of supply to support prices and reduce the global overhang of oil in storage. In its report, OPEC forecast that non-OPEC investment would increase by just 3.5% year on year in 2018, rising to 8.1% in 2019. A major portion of that will come from US shale investment, which is projected to increase by 20% year on year in 2018 and then ease to 16% in 2019. US production will account for 89% of the projected 1.72 million b/d in non-OPEC output growth in 2018, OPEC said.

Hedge funds take profits after oil rally: Kemp (Reuters) – Hedge funds have continued to pare their bullish positions in petroleum despite the continued rise in prices and the prospect of renewed sanctions reducing exports from Iran. The net long position of hedge funds and other money managers in the six most important petroleum futures and options contracts was cut by a further 21 million barrels in the week to May 8. The combined net long has now been reduced by a total of 55 million barrels in the three most recent weeks, according to position reports published by regulators and exchanges. As in previous weeks, the liquidation last week was concentrated in crude, while funds’ exposure to refined products was increased slightly (https://tmsnrt.rs/2rFWRdl ). For all the bullish commentary around the outlook for oil prices, fund managers appear to be taking profits after a strong rally in crude oil rather than adding new positions. The exception is middle distillates, such as diesel and heating oil, where global consumption is growing fast, inventories are declining and the market is looking increasingly tight. Fund positioning remains stretched, with longs outnumbering shorts by 12:1 across the whole petroleum complex and by as much as 14:1 in the case of Brent. While fundamentals still appear supportive, higher oil prices are likely to restrain consumption growth and stimulate more supply in the second half of 2018 and into 2019. Against this backdrop, the extremely lopsided positioning could become a significant source of downside risk if and when portfolio managers try to exit some of their positions.

Brent oil reclaims 3 ½-year highs as Middle East violence feeds oil-flow concerns — Global benchmark Brent crude jumped back Monday to its highest level in 3½ years, as violence in the Middle East fed concerns over the flow of oil in the region.The gain for U.S. benchmark oil prices weren’t quite as impressive with traders wary of OPEC’s ability to offset crude supply declines and growing U.S. production.On the New York Mercantile Exchange, June West Texas Intermediate crudeCLM8, +0.06% tacked on 26 cents, or 0.4%, to settle at $70.96 a barrel after trading as high as $71.26. July Brent crude oil LCON8, +0.09% the European and global benchmark, surged by $1.11, or 1.4%, to end at $78.23 a barrel on ICE Futures Europe – the highest finish since late November 2014.Concerns over violence in the Middle East “are having overseas buyers bid up Brent as they are more reliant on the European Benchmark,” said Phil Flynn, senior market analyst at Price Futures Group. “Brent is on a tear.”Palestinians clashed Monday with the Israeli military at the fence dividing the Gaza Strip and Israel, reportedly leaving dozens of protesters dead as the U.S. opened its embassy in Jerusalem. Last week, futures prices for WTI rose by 1.4% and Brent added 3%, buoyed by the Trump administration’s move to abandon the 2015 international agreement aimed at curbing Iran’s nuclear program. The decision paved the way for the reimposition of the U.S. economic sanctions on Tehran after a six-month winddown period.“The bottom line for oil is that global supply will fall by some unknown amount as a result of the U.S. leaving the Iran deal, and that is bullish given the backdrop of high OPEC compliance, strong global demand expectations, geopolitical uncertainty and stabilizing U.S. production growth” in the second quarter, analysts at the Sevens Report said on Monday.

Oil Prices Turn Higher As Traders Digest OPEC Report – Oil prices shook off earlier weakness to trade higher on Monday, after OPEC said a global glut has been virtually eliminated thanks in part to ongoing OPEC-led supply cuts and fast-rising global demand. OPEC said in its monthly report published earlier that oil inventories in developed nations in March fell to 9 million barrels above the five-year average. That’s down from 340 million barrels above the average in January 2017. “The oil market was underpinned in April by renewed geopolitical issues, tightening product inventories and robust global demand,” OPEC said in the report. As well as OPEC’s voluntary cuts, a plunge in Venezuelan oil output due to economic crisis and the United States’ departure from a nuclear deal with OPEC member Iran have supported prices. OPEC signaled it was ready to step in should “geopolitical developments” impact supply. Brent crude futures, the global benchmark, tacked on 31 cents, or 0.4%, to $77.44 a barrel by 8:50AM ET (1250GMT). It fell to as low as $76.56 earlier. ,Meanwhile, New York-traded WTI crude futures inched up 10 cents to $70.81 a barrel, after hitting an intraday low of $70.28. Oil was on the backfoot earlier as a rise in U.S. drilling for new production dampened sentiment. U.S. drillers added 10 oil rigs in the week to May 11, bringing the total count to 844, the highest number since March 2015, General Electric’s Baker Hughes energy services firm said in its closely followed report on Friday. That was the sixth consecutive weekly increase in the rig count, underscoring worries about rising U.S. output.

Oil gains while U.S. crude’s discount to Brent deepens (Reuters) – Oil prices rose on Monday as OPEC reported that the global oil glut has been virtually eliminated, while U.S. crude’s discount to global benchmark Brent widened to more than $7, its deepest in five months. Global benchmark Brent gained $1.11 to settle at $78.23 a barrel. West Texas Intermediate crude rose 26 cents to settle at $70.96. WTI’s discount to Brent was as much as $7.28, its widest since Dec. 12 on surging U.S. output. U.S. shale production is expected to hit a record 7.18 million barrels per day (bpd), the Energy Information Administration said. The production growth may be far from over, contributing to U.S. crude’s discount to Brent, analysts said. “You have the threat that a high enough price will start to activate the 7,700 drilled but uncompleted wells in the Lower 48 states,” said Walter Zimmerman, chief technical analyst at ICAP TA. Contrastingly, OPEC’s latest report was more bullish. “That absolute plunge in Venezuelan production … just highlights how tenuous the market is in terms of the supply-and-demand balance,” said John Kilduff, a partner at Again Capital LLC. Even so, OPEC and its allies were still trimming output more than their supply-cutting pact required. Meanwhile, output from third-largest OPEC producer Iran is uncertain on renewed U.S. sanctions. “If Iranian crude is really taken off the water, it’s going to impact Brent much more than it’s going to impact WTI,” Zimmerman said. It is unclear how U.S. sanctions will affect Iranian oil. Much will depend on how other major oil consumers respond to Washington’s action against Tehran, which will take effect in November.

Rising oil prices boost U.S. economy: Kemp (Reuters) – U.S. net petroleum imports have fallen to the lowest level in more than half a century as a result of the shale revolution, which is profoundly changing the impact higher oil prices have on the economy. Since the 1860s, the United States has been the world’s largest producer and consumer of oil, which means it has a complicated relationship with oil prices. Rising oil prices benefit some businesses and workers at the expense of others, and the same has been true about a sharp price fall. Until after World War Two, the country was a net exporter to the rest of the world, the first era of U.S. energy dominance. But from the late 1940s and especially the 1950s, the United States turned into an increasingly major oil importer. Since then, the principal effect of a rise in oil prices has been to transfer income from consumers and businesses in the United States to oil-producing countries in Latin America, the Middle East and Africa. Rising prices have put pressure on the U.S. balance of payments and the dollar’s value, contributing to an occasionally negative relationship between the price of oil and the exchange rate.But as net imports have declined in the last decade, the picture has changed again, and the main transfers of income are now occurring within the United States rather than with the rest of the world. The impact of oil prices on the U.S. trade deficit and the exchange rate is becoming much less significant than before.Instead, rising prices are transferring income from net consuming states such as California, Florida, New York and Illinois to net producing states including Texas, Oklahoma, New Mexico and North Dakota.

WTI/RBOB Drop After Surprise Crude Build After clinging to the green all day, despite a strong dollar, WTI/RBOB slipped into the red after API reported a much bigger than expected (and surprise) crude build (+4.854mm vs -1.75mm exp). API

• Crude +4.845mm (-1.75mm exp)
• Cushing +62k (+550k exp)
• Gasoline -3.369mm
• Distillates -768k

After drawing down last week, expectations were for crude draw this week but API reported a large surprise crude build… Crude inventories are 2.4% below the five-year norm, while Cushing stockpiles are about 30.5% below the average.WTI/RBOB managed gains today (RBOB highest since Oct 2014) – despite the dollar strength – heading into API…but kneejerked notably lower on the print… As Bloomberg reports, a large number of drilled-but-uncompleted wells in shale plays and the potential for rising output have weighed on American prices, said Walter Zimmermann, chief technical analyst at ICAP-TA. “You are probably seeing some serious producer hedging into these lofty levels here, whereas I don’t see anybody keen to hedge against Brent given these geopolitical fears.” Notably, the Brent-WTI spread blew out to $8 today…

Get ready for $100 a barrel oil and the conflict it represents — It’s time to prepare for $100 oil. A price of $150, taking out the 2008 high, may also be a real possibility if events in the Middle East continue to escalate, as we have witnessed in recent days.While I believe that oil, given the vast supplies available around the world, has an economic value of about $20 per barrel, it’s becoming increasingly impossible to ignore a world that seems to want higher prices for crude.Through a production agreement, OPEC and Russia have successfully offset the glut of crude oil being pumped every single day in the United States. Rising demand for oil in a synchronized global economic recovery has also helped bring supply and demand in better balance over the last year-and-a-half.Having said that, U.S. oil output approaches 11 million barrels per day, and crude oil production exceeds that of Saudi Arabia and could surpass the world’s largest producer, Russia, sometime next year.Despite that, the geopolitical risk premium in oil has driven crude prices to nearly four-year highs and shows no signs of abating. And so many interests benefit from higher oil prices; it appears there is a part of the world ready, and willing, to accept much more expensive energy.This array of developments comes just as the summer driving season begins in the U.S., meaning that consumers should expect higher prices at the pump, certainly in excess of $3 per gallon, on average, and possibly much higher. The U.S. exit from the Iranian nuclear deal, the unprecedented exchange of rocket attacks between Iranian and Israeli forces and the general belief among the U.S., Saudi Arabia and Israel that Iran’s regional expansion needs to be stopped all argue for a continued rise in the price of crude.

WSJ Sounds The Alarm: “There’s No Getting Over” Gas At $4 A Gallon – Consumers, who are already being squeezed by rising interest rates (even as the return on their cash deposits remains anchored near zero), are facing another potential constraint on their already limited purchasing power. And that constraint is rising gasoline prices, which, as we pointed out last month, could erode the stimulative impact of President Trump’s tax plan as they sop up what little money the middle class has been saving.As prices rise and banks scramble to update their forecasts, the Wall Street Journal has become the latest publication to sound the alarm over what is, in our view, one of the biggest threats facing the US economy in the ninth year of its post-crisis expansion. In its story warning about $3 a gallon oil (of course, we’re already seeing $4 a gallon in parts of California and other high-tax states), WSJ cited Morgan Stanley’s latest projection that rising gas prices could wipe out about a third of the annual take-home pay generated by the tax cuts Rising fuel costs can also feed inflation and pressure interest rates. Even though the Federal Reserve typically looks past volatile energy prices in the short term, higher energy costs help shape consumer confidence. And with the central bank poised to be more active this year, rising energy costs pose an additional risk to the economy. Morgan Stanley estimates that if gas averages $2.96 this year, it would take an annualized $38 billion from spending elsewhere, an upward revision from the bank’s $20 billion estimate in January. That would wipe out about a third of the additional take-home pay coming from tax cuts this year, the analysts said. ..“Three dollars is like a small fence. You can get through it, you can get over it,” said “But $4 is like the electric fence in Jurassic Park. There’s no getting over that.” And in a report published in April, Deutsche Bank illustrated how rising fuel costs will disproportionately squeeze the most vulnerable among us – a cohort of consumers who already shoulder an outsize share of the country’s household debt.

Oil climbs on Middle East unrest, with Brent notching another multiyear high – Oil settled higher Tuesday, with supply concerns tied to political unrest in the Middle East lifting prices for the global crude benchmark to its highest finish in 3½ years.Growth in U.S. output, meanwhile, has tamed price moves for U.S. benchmark crude in recent sessions, preventing it from notching a fresh multiyear high. On the New York Mercantile Exchange, June West Texas Intermediate crude added 35 cents, or 0.5%, to settle at $71.31 a barrel. It had settled at $71.36 on Thursday, its highest since Nov. 26, 2014. July Brent crude oil the European and global benchmark, climbed by 20 cents, or 0.3%, to $78.43 a barrel, marking another finish on ICE Futures Europe at the highest since late November 2014. “European and Asian buyers of Brent are pricing in the risks and realities of the fallout from sanctions on Iran to increased tensions in the Gaza strip, as well as the inability of traditional Brent oil producers to fill that void,” The price spread between U.S. benchmark WTI and Brent has widened to more than $7 a barrel. “The spread between the two contracts is basically Europe and Asia screaming for more oil from the United States to fill the potential void and feed their ravenous oil demand,” he said. “For WTI, while it is under performing at this point, it is not by any means bearish for the U.S. benchmark,” said Flynn. “The strong global demand for WTI will keep us supported, and even if some of the global risks get reduced, WTI will benefit from the unwinding of the Brent versus WTI spread that is reflecting most of the geopolitical risks.” The Organization of the Petroleum Exporting Countries reduced its forecast for global oil production in its most recent report. Although the group said its crude output inched up in the previous month, investors interpreted the minimal increase as a sign of OPEC’s continued commitment to rebalancing the market, especially from its de facto leader Saudi Arabia.

Oil Inches Closer To $80 – Brent topped $79 per barrel in early trading on Tuesday, closing in on the psychological threshold of $80 per barrel. However, benchmark prices posted modest losses by mid-morning. The oil market continues to tighten with OPEC keeping barrels off of the market and reducing inventories down to the five-year average. The near-term tension between bulls and bears will continue to be dominated by geopolitical risk, with fears of outages in Iran pushing prices up. . Oil prices at $100 per barrel would reduce U.S. GDP by 0.4 percent in 2020 compared to if oil was priced at $75 per barrel, according to Bloomberg. But that economic hit is not as strong as it used to be because the U.S. economy has become less energy intensive and the U.S. also exports more oil than ever before. “$100 oil won’t feel like it did in 2011,” and could end up feeling “more like $79″ per barrel, economists Jamie Murray, Ziad Daoud, Carl Riccadonna and Tom Orlik concluded. “With the U.S. still firing on close to all cylinders, the rest of the world would suffer less as well – global output would be down by 0.2 percent in 2020.” As Venezuela’s oil production and exports continue to fall off a cliff, the case for higher oil prices is strong. A decline in Iranian oil exports, which will occur alongside plunging output from Venezuela, would create the “perfect cocktail” for oil to hit $100 per barrel this year or next, according to PVM. At that point, OPEC would be under a great deal of pressure to lift the production limits. ConocoPhillips’ (NYSE: COP) seizure of PDVSA assets in the Caribbean threatens to accelerate production declines in Venezuela. OPEC said the oil supply surplus is virtually gone, with inventories standing just 9 million barrels above the five-year average in March, which means that by the time data is published for May, inventories will have already fallen below average levels. The OPEC report showed a slight increase in output, rising by 12,000 bpd, driven by higher output from Saudi Arabia but also revealing deep declines in Venezuela. Oil prices are at three-year highs, and hedge funds and other money managers have pocketed some profits over the past week. For the week ending on May 8, investors cut their bullish bets. The positioning is still overwhelmingly on the long side, exposing the market to downside risk if sentiment sours.

Oil Market Report – IEA – OMR Public

• Global oil demand growth for 2018 has been revised slightly downwards from 1.5 mb/d to 1.4 mb/d. While recent data confirms strong growth in 1Q18 and the start of 2Q18, we expect a slowdown in 2H18 largely attributable to higher oil prices. World oil demand is expected to average 99.2 mb/d in 2018.
• Global oil supplies held steady in April at close to 98 mb/d. Robust non-OPEC output offset lower OPEC production. Strong non-OPEC growth, led by the US, pushed global supplies up 1.78 mb/d on a year ago. Non-OPEC output will grow by 1.87 mb/d in 2018, a slightly higher rate than seen in last month’s Report.
• OPEC crude production eased by 130 kb/d in April, to 31.65 mb/d, on further declines in Venezuela and lower output in Africa. Compliance with the Vienna Agreement reached a record 172%. The call on OPEC crude and stocks will average around 32.25 mb/d for the remainder of 2018, nearly 0.6 mb/d higher than April output.
• OECD commercial stocks declined counter-seasonally by 26.8 mb in March to 2 819 mb, their lowest level since March 2015 and 214 mb below year-ago levels. In the process, they fell 1 mb below the five-year average.
• ICE Brent and NYMEX WTI futures prices rose to multi-year highs in recent days, and both are up by more than $10/bbl since the start of the year. Solid oil demand, reduced OPEC output and geopolitical developments continue to underpin price gains.
• Global refining throughput is on the rise with runs expected to hit a record 83 mb/d in July-August. Throughput growth, however, is not sufficient to cover all refined products demand, with stock draws expected to persist through 2Q18 and 3Q18.

IEA lowers 2018 oil demand growth estimate to 1.4 million b/d on higher prices The International Energy Agency warned Wednesday a potential supply shortfall from Iran and Venezuela could become a “major challenge” forother big oil producers if they are to fend off sharp price rises and fill the gap, and reiterated its readiness to act if needed to ensure adequate supplies. The IEA also said OECD oil stocks had fallen below the five-year average level in March for the first time since 2014, by 1 million barrels, representing the main benchmark for the success of OPEC/non-OPEC production cuts agreed in 2016 and raising pressure for a rethink by those behind the cuts, chiefly Russia and Saudi Arabia. The total OECD stock figure was down 26.8 million at 2.82 billion barrels, the lowest level since March 2015, the IEA said in its latest monthly report. Market reaction to the report was muted however, following indications earlier of rising US crude oil stocks from the American Petroleum Institute. Also mitigating the IEA’s concern, it unusually lowered its estimate for growth in world oil demand this year, by 30,000 b/d to 1.44 million b/d, to reflect the effect of higher oil prices on consumption, although it said it was “confident” of underlying demand growth around the world, citing economic findings from the International Monetary Fund. Its new estimate included an upward revision for the first half of the year as a result of cold weather in the US and Europe and new petrochemical capacity in the US. Lower OPEC output and lower demand prospects were also accompanied by an upward revision to the IEA’s US oil supply estimate, as shale drillers received a boost from higher prices. It raised its estimate of this year’s increase in non-OPEC supply by 80,000 b/d to 1.87 million b/d.

Why IEA, OPEC and EIA have such different outlooks for energy consumption – Predicting future energy consumption trends is a hazardous science. It is plagued with guesswork related to ‘known unknowns’ and ‘unknown unknowns’. An assessment of this troubled political and scientific landscape from UMS Group, a boutique energy and utilities management consulting firm, compares four major predictions of how energy consumption will change over the next 25 years. These four separate analyses of future energy trends have been developed by the planet’s leading organisations and institutions in the energy sector. Two distinct predictive models come from the International Energy Agency’s (IEA) World Energy Outlook 2018 report. One is a Sustainable Development Scenario (SDS), which is a ‘what if’ analysis based on the successful implementation of the Paris Climate Accord, the other a New Policies Scenario (NPS) which reflects a more realistic projection. Models from the US government’s Energy Information Administration (EIA), and OPEC – the Organization of Petroleum Exporting Countries – make up the other two projections assessed by UMS Group. Yet as noted by Mart Vos, a Consultant at UMS Group, they are a drop in the ocean compared to the thousands of other reports released by actors ranging from Shell and BP, to Bloomberg New Energy Finance and several climate change departments like the DECC. What unifies this web of conflicting reports, according to Vos’ analysis, is that they are all different from one another. . Consider the varied expectations for future consumption of the traditional fossil fuels – oil, gas and coal. The EIA expects oil demand to increase by 17% in 2040, almost identical to the 16% projected by OPEC. The IEA’s NPS model offers a slightly lower estimate of 10%. The idealistic SDS model projects a huge 25% drop in oil demand if dream policies are implemented. Main reasons for EIA’s more optimistic outlook on oil demand are the rapid industrial growth that will be witnessed in high population countries like India and China and increased demand for transportation as upcoming nations continue their shift to urbanised living

Crude futures ease back after bearish IEA report; Brent at $77.97/b, WTI at $71.10/b – Crude oil futures edged down in European morning trading Wednesday in the wake of the International Energy Agency trimming its estimate for global oil demand growth in 2018. At 1005 GMT, ICE July Brent crude futures were trading at $77.97/b, down 46 cents from Tuesday’s settle, while NYMEX June WTI crude futures were 21 cents lower at $71.10/b. In its monthly oil market report, released Wednesday morning, the IEA lowered its estimate for growth in world oil demand this year to 1.4 million b/d from 1.5 million b/d due to higher oil prices. “At the same time, non-OPEC supply is growing more strongly than previously anticipated, thereby reducing the call on OPEC to 32.25 million barrels per day (previously estimated at 32.5 million barrels per day). Thus the market is less tight than hitherto assumed,” said Commerzbank analysts in a morning note. A downward movement in the demand estimate, combined with the American Petroleum Institute reporting Tuesday a 4.85 million barrel weekly increase in US crude oil inventories, when the market was expecting a drawdown, has brought a bearish sentiment to the market despite concerns over supply from Iran and Venezuela. The US Energy Information Administration publishes its more closely watched weekly numbers later today. The IEA warned Wednesday a potential supply shortfall from Iran and Venezuela could present a “major challenge” for oil producers if they are to fend off sharp price rises and fill the gap, and reiterated its readiness to act if necessary to ensure a well-supplied market.

U.S. crude stocks fall, exports hit a record high: EIA (Reuters) – U.S. crude oil stockpiles fell last week as exports hit a record high and refinery ramped up output, while gasoline inventories dropped more than expected ahead of the summer driving season, the Energy Information Administration said on Wednesday. Crude inventories fell 1.4 million barrels in the week to May 11, compared with analysts’ expectations for a decrease of 763,000 barrels. Net U.S. crude imports fell 411,000 barrels per day as exports rose to a record 2.6 million bpd, benefiting of late from the widening spread between U.S. crude oil and global benchmark Brent, which responds more to world supply outlook. Crude production continued to grow to record highs, rising 20,000 bpd to 10.72 million bpd last week, the EIA said, though weekly figures are considered less reliable than monthly data. The United States in February produced 10.3 million bpd, a record. Refining activity rose, particularly in the Midwest, as maintenance season ebbs as summer driving season heats up. Refinery crude runs rose by 149,000 bpd, while refinery utilization rates rose by 0.7 percentage points to 91.1 percent of overall capacity. U.S. Midwest refinery utilization rates increased last week to 96 percent of capacity, the highest since at least 2010 seasonally. Still, gasoline stocks were down sharply, falling by a surprise 3.8 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.4 million-barrel drop. Gasoline demand is up 0.7 percent from last year over the past four weeks to 9.4 million bpd. That demand is anticipated to increase as summer driving season kicks in. Prices were little changed after the data. U.S. crude fell 15 cents to $71.16 a barrel as of 10:45 a.m. EDT (1445 GMT), while Brent lost 20 cents to $78.22 a barrel.

US Crude Oil Inventories Decline By 1.4 Million Bbls — Price Of WTI Unchanged – May 16, 2018 — Link here.

• US crude oil inventory: decreased by 1.4 million bbls (complete opposite of API data posted yesterday
• US crude oil inventory: now at 432.5 million bbls; the EIA says this is in the lower half of the average range for this time of year
• for newbies: I first stared paying close attention to this in November, 2016, when Saudi Arabia said it was going to cut production and start to drawdown global supplies. At that time, it certainly appeared to me that in modern times (i.e., the last 20 years) the US got along just fine with 350 million bbls of crude oil in storage. Even adjusting for increased demand over the past 20 years, it was hard for me to see a crude oil inventory of more than 400 million bbls as anything but “bearish” for those trading WTI.

US crude oil inventories over the past year or so:

• April 26, 2017: 529 million bbls (when I first started tracking this data and posting it on a weekly basis)
• December 28, 2017, week 35: 432 million bbls
• January 24, 2018, week 39: 412 million bbls — this was the point; since then it has crept back up
• April 11, 2018, week 50: 429 million bbls — the last time I posted the data, and quit tracking on my spreadsheet; it was clear, the “drawdown” was over
• today, May 16, 2018: 433 million bbls
• price of WTI today: $71.10, down 29 cents from previous report;

So, clearly, when we started this process, 530 million bbls in US crude oil inventory was “outta sight”; something needed to be done. Apparently, getting to 430 million bbls was just fine. Let’s see how this plays out.

WTI/RBOB Bounce After Crude Draw Despite New Record Production WTI/RBOB prices traded lower since last night’s API-reported surprise crude draw but a 1.404mm draw (and bid gasoline draw) reported by DOE prompted a buying knee-jerk in prices. Production continued to rise to a new record high. Ahead of the data, Bloomberg explained that the number to watch today will be gasoline exports, which can typically drift lower this time of year as more product goes to domestic customers in advance of the summer driving season. If growing U.S. production and high refinery runs churning out gasoline are met with clues that domestic demand isn’t matching up to expectations, the crude price that has a lot of geopolitics baked in may falter still. DOE:

• Crude -1.404mm (-2.00mm exp.. BBG users +1.13mm exp)
• Cushing +53k (+550k exp)
• Gasoline -3.79mm
• Distillates -92k

DOE reports a draw – smaller than expected, but dramatically different from API’s surprise build. Gasoline stocks continued to slide but distillates draw seems to have stalled..

Oil prices rise as U.S. crude stockpiles drop – Xinhua | English.news.cn: (Xinhua) — Oil prices traded higher on Wednesday after a U.S. crude oil report showed the country’s crude stocks continued to decline. U.S. crude oil inventories decreased in the week ending May 11, and the refining sector increased 149,000 barrels per day, the U.S. Energy Information Administration (EIA) said in its Weekly Petroleum Status Report on Wednesday. U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 1.4 million barrels during the week ending May 11. At 432.4 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year, the report said. Analysts said the EIA’s latest weekly petroleum report has fueled the bullish sentiment on the oil market, adding that geopolitical concerns, tightening product inventories and robust demand would continue to provide support for prices. The West Texas Intermediate for June delivery rose 0.18 U.S. dollar to settle at 71.49 dollars a barrel on the New York Mercantile Exchange, while Brent crude for July delivery increased 0.85 dollar to close at 79.28 dollars a barrel on the London ICE Futures Exchange.

Oil prices could rise to $85 a barrel by July, warns energy expert Dan Yergin — Oil prices may continue to rally past 3½-year highs and all the way to $85 a barrel as soon as July, according to Pulitzer Prize-winning author and closely followed energy analyst Dan Yergin. Prices in the oil market have been steadily rising since last year, fueled by strong demand and output caps imposed by major producers aimed at draining a global crude glut. More recently, oil futures have rallied faster than expected as geopolitical tensions rattle the market. Brent crude, the international benchmark for oil prices, rose toward $80 a barrel on Tuesday after hitting its highest level since November 2014. Yergin said the cost could continue to climb due to the combined impact of falling output in crisis-stricken Venezuela, renewed U.S. sanctions on Iranian crude exports, and wars in Yemen and Syria that involve major oil-producing nations. “We could see oil prices in July when demand is high … several dollars higher than it is. We could see it as high as $85 at least for a short period of time,” Yergin, vice chairman of IHS Markit, told CNBC’s “Squawk Box” on Wednesday. Yergin’s remarks add an influential voice to a chorus of analysts warning about prices spikes. Goldman Sachs last week said Brent crude could spike above its $82.50 summer forecast, while Bank of America Merrill Lynch warned Brent could hit $100 a barrel by next year. Yergin said he is particularly concerned about Venezuela, where the fundamentals of the oil market and geopolitics are both at play. Venezuelan output has fallen from almost 2.5 million barrels a day a couple of years ago to roughly 1.4 million barrels a day today, and could drop to 800,000 barrels a day by next year, he said. “The screws are really tightening on Venezuela,” said Yergin, who notes that ConocoPhillips is seeking to seize assets owned by state oil giant PDVSA and warns Sunday’s presidential election threatens to draw fresh U.S. sanctions.

IEA: High Oil Prices “Taking A Toll” On Demand — Geopolitics has taken over the oil market, driving oil prices up to three-year highs. The inventory surplus hasvanished, and more outages could push oil prices up even higher. Yet, there are some signs that demand is starting to take a hit as oil closes in on $80 per barrel.In the IEA’s May Oil Market Report, the agency said that OPEC might be needed to step in and fill the supply gap if a significant portion of Iran oil goes offline. Saudi Arabia suggested shortly after the U.S. announced its withdrawal from the Iran nuclear deal that OPEC would act to mitigate any supply shortfall should it occur.But while geopolitical fears helped push Brent up to $79 per barrel in recent days, the underlying fundamentals are also mostly bullish. Venezuela’s production is plummeting, and output is 550,000 bpd below its agreed upon target as part of the OPEC deal. Conservative estimates suggest that the country could lose several hundred thousand barrels per day over the course of 2018, but there are several massive threats to PDVSA’s operations that could make that forecast look optimistic. The big question is if supply will be lost in Iran, which, coupled with the supply losses in Venezuela, could severely tighten the oil market. “The potential double supply shortfall represented by Iran and Venezuela could present a major challenge for producers to fend off sharp price rises and fill the gap, not just in terms of the number of barrels but also in terms of oil quality,” the IEA wrote in its report. However, the cure for higher oil prices tends to be higher oil prices. The IEA lowered its demand forecast for 2018 by 40,000 bpd – not a massive revision, but notable because it offers some signs that demand will slow as prices rise. Some other reports back up this notion. There are reportedly spot cargoes for oil from West Africa, Russia and Kazakhstan that are going unsold, forcing steep discounts. “While recent data continue to point to very strong demand in 1Q18 and the start of 2Q18, we expect a slowdown in growth in 2H18.” Up until now, demand growth looked strong, but “the recent jump in oil prices will take its toll.”

Rising oil prices herald next phase in cycle: Kemp (Reuters) – Oil prices are now in the top half of the cycle, with benchmark Brent on Thursday trading above $80 per barrel for the first time since November 2014. In real terms, prices averaged $75 per barrel over the course of the last full cycle, which lasted from December 1998 to January 2016. The recent rise in prices sends a strong signal about the need for more production and slower growth in oil consumption. In the next few months, the narrative will increasingly turn to boosting supply and restraining demand in order to stabilise inventories and return the market to balance. Between 2014 and 2017, oil market “rebalancing” meant restricting production, stimulating demand and cutting excess inventories. For the rest of 2018 and 2019, rebalancing will mean precisely the opposite. The oil industry has always been subject to deep and prolonged cycles of boom and bust, and there is no reason to think the next few years will be any different. (https://tmsnrt.rs/2wUWBvY ) Cyclical behaviour is the single most important distinguishing characteristic of oil markets and prices, and is deeply rooted in the industry’s structure. The price cycle is driven by the low responsiveness of production and consumption to small changes in prices, at least in the short term. The behaviour of many oil producers and consumers exhibits a strong backward-looking component, so decisions tend to be based on where prices have been recently rather than where they are likely to go. But most importantly, the oil markets are a complex adaptive system which is subject to multiple feedback mechanisms operating at different speeds and timescales. The price cycle is driven by the interaction of positive feedback mechanisms (which magnify shocks) and negative feedback mechanisms (which dampen them). In the short run, positive feedback mechanisms are more influential and tend to push the market even further away from balance following an initial disturbance. In the medium and long term, however, negative feedback mechanisms dominate and will eventually force production and consumption back into alignment.

Oil Jumps Above $80 For The First Time Since Nov. 2014 – Two weeks after Saudi Arabia said it was targeting $80/bbl oil, this morning Riyadh got its wishes early when Brent hit the Saudi target, jumping as much as 1% to $80.18, following the latest drop in U.S. crude inventories and as traders continued to fret about the consequences of renewed sanctions on Iran. This was the highest price since November 2014. Today’s jump followed a reported from Goldman titled simply “The case for commodities strengthens ” according to which America’s surging shale output won’t be able to replace the potential drop in Iranian oil shipments after the U.S. reimposed sanctions on OPEC’s third-largest producer. US shale cannot solve the current oil supply problems. Even if only 200-300 kb/d of Iran exports are at risk by year-end, OPEC is not likely to preempt this loss, only react to it. Further, any response will reduce spare capacity in an increasingly tighter market. The erosion in Venezuela and Angola oil output is accelerating at the same time ex-US growth is stalling. Only the US has seen supply surprises, but is facing growing pains with filled pipeline capacity, constraining US growth into 2019. The paradox, of course, is that rising oil prices crush the benefit to the middle class of Trump’s tax cuts; crude has rallied this month to the highest level in more than three years after U.S. President Donald Trump withdrew from a 2015 pact between Iran and world powers that had eased sanctions on the Islamic Republic in exchange for curbs on its nuclear program. As we noted yesterday, while the International Energy Agency said a global glut’s been eliminated thanks to output curbs by OPEC, it warned high prices may hurt consumption and cut forecasts for demand growth.

OPEC sees oil rally towards $80 as short-term spike, not supply-driven (Reuters) – OPEC sees oil’s rally towards $80 a barrel as a short-term spike driven by geopolitics rather than any supply shortage, four OPEC delegates said, a sign the group is not rushing yet to rethink its supply-cutting agreement. The view of top exporter Saudi Arabia is that any brief, speculator-driven jump in oil prices is not sufficient grounds for producers to boost output, an OPEC source familiar with the kingdom’s thinking said. For such a decision to occur, the rally would need to be driven by data pointing to a supply impact, the source said. The four OPEC delegates said the latest rise in prices stemmed more from concern about U.S. sanctions on Iran and tension in the Middle East, rather than a suddenly tighter balance between oil supply and demand. “Prices are high just because of the tensions,” one of the OPEC delegates, who declined to be identified, said. Since last year, oil has been supported by a deal by the Organization of the Petroleum Exporting Countries, plus Russia and other non-members, to cut output. Prices have risen about 40 percent since the accord began in January 2017. Global benchmark Brent crude LCOc1 on Tuesday hit $79.47, the highest since November 2014, before easing below $78 on Wednesday and settling at $79.28 a barrel. Prices could rally further before declining, according to some in OPEC. “It may exceed $80 and then go down,” one of the sources said. In any case, the extent of the rally has yet to cause any real concern. “Not yet,” said another delegate, asked whether oil at $79 was too high.

U.S. oil rig count holds steady after six weeks of gains -Baker Hughes (Reuters) – The U.S. oil rig count held steady this week after rising for six weeks in a row even as crude prices soar to multi-year highs, prompting drillers to extract record amounts of oil, especially from shale. The total oil rig count held at 844 in the week to May 18, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. The U.S. rig count, an early indicator of future output, is much higher than a year ago when 720 rigs were active as energy companies have been ramping up production in tandem with OPEC’s efforts to cut global output in a bid to take advantage of rising prices. U.S. crude futures traded over $72 a barrel this week on concerns that Iranian exports could fall because of renewed U.S. sanctions, their highest since November 2014. Looking ahead, crude futures were trading around $70 for the balance of 2018 and $66 for calendar 2019. Shale production is expected rise to a record high 7.2 million barrels per day (bpd) in June, with the majority of the increase from the Permian basin, the biggest U.S. oil patch, where output is forecast to climb to a fresh high of 3.3 million bpd, the Energy Information Administration (EIA) this week projected. Earlier this month, the EIA forecast average annual U.S. production would rise to a record high 10.7 million bpd in 2018 and 11.9 million bpd in 2019 from 9.4 million bpd in 2017. In anticipation of higher prices, U.S. financial services firm Cowen & Co this week said the exploration and production (E&P) companies they track have provided guidance indicating a 13 percent increase this year in planned capital spending. Cowen said those E&Ps expect to spend a total of $81.2 billion in 2018, up from an estimated $72.1 billion in 2017.

US Oil Rig Count Flat As Prices Stabilize – US drillers added 1 rig to the number of oil and gas rigs this week, according to Baker Hughes, with oil rigs holding steady and gas rigs adding one. The oil and gas rig count now stands at 1,046 – up 145 from this time last year.Meanwhile, neighboring Canada gained 4 oil and gas rigs for the week – the first gain in weeks.Both the Brent and WTI benchmark were trading up on the day at 9:46am EST with Brent crude surpassing the $80 mark at one point on Thursday. The shaky geopolitical landscape in major oil-producing regions has sent oil prices to near four-year highs, as the market grows increasingly wary over possible supply crunches ala US sanctions on Iran, Venezuela’s colossal mess that has sent PDVSA production fall month after month with no end in sight, and OPEC’s almost too-good adherence to its production cut deal.In the wake of the higher oil prices, Saudi Arabia and the UAE have made public statements that promised to fill any supply gaps, should they in fact materialize, although this has done little to calm the market. WTI was trading up 0.06% at $71.53, with Brent trading up 0.39% at $79.60. Western Canada Select (WCS) was trading flat at $56.44 – a massive discount to WTI. Working the other side of the push/pull for oil prices, US oil production rose again in the week ending May 11, reaching 10.723 million bpd – the twelfth build in as many weeks – and less than 300,000 bpd shy of the 11.0 million bpd forecast that many are predicting for 2018.US production has steadily increased since OPEC engaged in a supply cut deal that sought to remove 1.8 million bpd from the market. At the time the deal was announced, the US was producing 8.6 million bpd. Today, the US is producing more than 2.0 million bpd over that figure, while OPEC/NOPEC continues to curb supply on its end. At 5 minutes after the hour, WTI was trading down 0.36% at $71.23, with Brent trading down 0.24% at $79.06.

Oil Breaks $80 And Gasoline Prices Spike –Oil prices took a breather on Friday, with Brent sitting just shy of $80 per barrel. The Venezuelan election on Sunday could be the next near-term catalyst for the oil market. . Brent briefly breached $80 per barrel this week, although it is facing resistance at that level. Still, oil prices are at their highest in three and a half years. “There’s the Iran story which continues to develop and the general talk about a tighter market. It will be interesting to see if we make a clean break of $80 next week. It seems like that’s the direction we are going,” Jens Pedersen, a senior analyst at Danske Bank A/S, said in a Bloomberg interview. Average retail gasoline prices in the U.S. have climbed to $2.90 per gallon this week, but with Brent hitting $80 per barrel, more pain at the pump could be on the way. Peak summer demand unofficially begins during the Memorial Day holiday at the end of May, and this year motorists will see the highest gasoline prices in more than three years. The average motorist will pay an additional $100 for gasoline this summer compared to last year. . Costs for oilfield services are on the rise as companies struggle to find enough workers. “Recruitment and staffing is a big challenge. We’re aggressively focused on recruiting people,” Kevin Neveu, chief executive at Precision Drilling Corp., said at a conference in Houston. He said they hired about 2,000 people in 2017. A study last year estimated that about 25 percent of the workers laid off during the downturn have moved on to other industries. . Saudi oil minister Khalid al-Falih said that OPEC and Russia were discussing price volatility and the health of the oil market. Al-Falih has said that OPEC would step in to mitigate and supply losses, although for now, the preference seems to be to leave the production limits unchanged. OPEC officials have said the price rally is being driven by fear and not based on the fundamentals.

Oil prices fall, Brent set for sixth week of gains (Reuters) – Oil prices fell on Friday, but Brent crude was on track for a sixth straight week of gains, boosted by plummeting Venezuelan production, strong global demand and looming U.S. sanctions on Iran. Brent futures for July delivery fell 26 cents, 0.3 percent, to $79.04 a barrel, by 1:08 p.m. EDT (1708 GMT). The global benchmark on Thursday broke through $80 for the first time since November 2014, and investors anticipate more gains due to supply concerns, at least in the short-term. Brent has gained about 20 percent since the start of the year. U.S. West Texas Intermediate (WTI) crude futures for June delivery dropped 21 cents to $71.28 a barrel, a 0.3 percent loss. The contract was on track for a third straight week of gains. “Oil prices are in overbought territory, which has prompted some profit taking in today’s trading session ahead of the weekend,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London. Traders were looking ahead to Venezuela’s election on Sunday, which could then trigger additional U.S. sanctions if President Nicolas Maduro is re-elected for a six-year term, though the opposition party has largely boycotted and two of his most popular opponents have been banned from running. The process has been has been criticized by the United States, the European Union and major Latin America countries. Further sanctions could hurt Venezuelan oil supply further, already reeling from lack of maintenance and state-run PDVSA’s inability to pay its bills. Most recently, the company elected to close its refinery in Curacao after ConocoPhillips has seized oil as it seeks to collect on a $2 billion court award.

The Regulations That Could Push Oil Up To $90 – International regulations on the fuels used in shipping could tighten the oil market and push prices up to $90 per barrel in the next two years. The International Maritime Organization (IMO) has new rules coming into effect at the start of 2020 requiring shipowners to dramatically lower the concentration of sulfur used in their fuels. Ships plying the world’s oceans tend to use heavy fuel oil, a bottom-of-the-barrel fuel that is especially dirty. The IMO regulations are targeting this fuel because of its high sulfur content. Current rules allow sulfur concentrations of 3.5 percent, but by 2020 ships must slash that to just 0.5 percent. Shipowners have several options to achieve this goal, and there probably won’t be a single approach. They could install scrubbers to remove sulfur from the fuel, switch to low-sulfur fuels, or switch to LNG. . LNG is also an expensive route. But a lot of shipowners will switch over to lower-sulfur fuels such as gasoil, a distillate similar to diesel. The IEA says that by 2020, demand for gasoil will shoot up to 1.74 million barrels per day (mb/d), an increase of over 1 mb/d relative to 2018. That will displace the heavy fuel oil that is currently widespread. The IEA says that high-sulfur fuel oil demand will crater from 3.2 mb/d in 2019 to just 1.3 mb/d in 2020. The switchover will have enormous ramifications for the oil market. The shipping industry represents about 5 percent of the global oil market, using about 5 million barrels of oil per day. Swapping out one form of oil for others will have ripple effects across the refining industry, awarding some and dealing losses to others. Refiners processing middle distillates – diesel and gasoil – will see a windfall. Meanwhile, refiners that churn out heavy fuel oil will be left with surplus product on their hands. “We foresee a scramble for middle distillates that will drive crack spreads higher and drag oil prices with it,” Morgan Stanley analysts said in a note.

Shiite cleric Sadr leads in Iraq’s initial election results (AP) – The political coalition of influential Shiite cleric Muqtada al-Sadr took an early lead in Iraq’s national elections in partial returns announced late Sunday by the Iraqi electoral commission. An alliance of candidates linked to Iraq’s powerful Shiite paramilitary groups was in second. The alliance is headed by Hadi al-Amiri, a former minister of transport with close ties to Iran who became a senior commander of paramilitary fighters in the fight against the Islamic State extremist group. Prime Minister Haider al-Abadi performed poorly across majority Shiite provinces that should have been his base of support. The announcement came just over 24 hours after polls closed across the country amid record low voter turnout. It included full returns from only 10 of the country’s 19 provinces, including the provinces of Baghdad and Basra. Members of the national election commission read out vote tallies for each candidate list in each of the 10 provinces on national TV. By the end of the announcement, al-Sadr’s list had the highest popular vote, followed by al-Amiri’s. Seats in parliament will be allocated proportionately to coalitions once all votes are counted. The commission gave no indication on when further results would be announced.

Shi’ite cleric’s election win puts Iran to the test in Iraq – (Reuters) – Already pressured by the U.S. withdrawal from the nuclear deal, Iran faces a major test in managing Shi’ite cleric Moqtada al-Sadr, a formidable opponent who beat Tehran’s longtime allies to achieve a shock victory in Iraq’s parliamentary election. But If Tehran overplays its hand by squeezing Sadr out of a coalition government dominated by its allies, it risks losing influence by provoking conflict between Iranian-backed Shi’ites and those loyal to Sadr. Populist Sadr all but won Iraq’s parliamentary election by tapping into growing public resentment directed at Iran and what some voters say is a corrupt political elite that has failed to help the poor. But Iran is unlikely to relinquish influence in Iraq, its most important ally in the Middle East, and will push for a coalition that will preserve its interests. “Iran will do everything in its power to remain strong in Iraq and to apply pressure,” said independent Iraqi analyst Wathiq al-Hashimi. “It’s a very critical situation.” Before the election, Iran publicly stated it would not allow Sadr’s bloc – an unlikely alliance of Shi’tes, communists and other secular groups – to govern. For his part, Sadr has made clear he is unwilling to compromise with Iran by forming a coalition with its main allies, Hadi al-Amiri, leader of the Badr paramilitary group and perhaps the most powerful man in Iraq, and former prime minister Nuri al-Maliki. After the election results were announced, he said he would only cooperate with Prime Minister Haider al-Abadi, Kurds and Sunnis.

Is Russia About To Abandon The OPEC Deal? – OPEC and Russia are meeting in a little more than a month to discuss the progress of their oil production deal and what’s next. On the face of things, there will be no surprises: every country taking part in the deal is still committed to the cuts until the end of the year. But Russia pumped more than its quota in both March and April. But Energy Minister Alexander Novak hinted that Russia might like to see a gradual easing of the cuts following the June meeting. But Iran sanctions will remove a certain amount of Iranian crude from international markets, making space for more from other producers, and Russia may just surprise its partners in the deal.Citigroup commodity analysts this week estimated that Russia has 408,000 bpd in idled capacity, which constitutes 4 percent of its total, which stands at 11.3 million bpd. That’s a lot less than Saudi Arabia’s idle capacity, which stands at 2.12 million bpd, but is apparently still a significant enough portion of the total.Some of Russia’s biggest oil players made it clear long ago that they have ambitious production plans for the future, which the production cuts are restraining. Even with this restraint, however, some are actually expanding production, including Gazprom Neft, which last year produced 4.1 percent more oil than in 2016 despite the cuts. The increase came on the back of new fields in the Arctic and the company’s Iraqi ventures. Rosneft pumped 7.6 percent more oil last year despite the cuts. For the first quarter of this year it reported a 1.2-percent decline in production because of the cuts, but it has also said that it could return to pre-cut production levels within two months. An advisor to the company’s president told Russian media this week the cuts were implemented with a view to a quick return to production when cutting was no longer necessary, so Rosneft had taken care to ensure the return to pre-cut levels is indeed quick.

Russia’s Sukhoi Plans to Supply SSJ100R Planes to Iran Despite US Sanctions — Russia’s Sukhoi Civil Aircraft said it would continue to cooperate with Iranian airlines in the framework of interim agreements on the delivery of SSJ100R passenger aircraft, despite the resumption of US sanctions on Iran.”The Sukhoi Civil Aircraft will continue to work with Iranian airlines under the preliminary agreements signed at the Eurasia Air Show in April 2018. According to the agreements, the parties are studying in detail the possibility of supplying an updated version of the aircraft – SSJ100R, which is implemented under the program of import substitution of the SSJ100 components,” the company’s press service said.According to Sukhoi Civil Aircraft President Alexander Rubtsov, the SSJ100R modification will be built without US-made components to avoid contract obstacles posed by potential US sanctions. The Russian company has recently signed memorandums of understanding on deliveries of 40 Sukhoi SSJ100R passenger planes to two Iranian airlines until 2022. Despite concerns about the US withdrawal from the Iran nuclear deal, which will probably lead to the loss of upwards of $40 billion in contracts for Boeing and Airbus, Russian airplane manufacturers have a historic opportunity to gain a new foreign market for its latest designs.

Clear thinking required as sanctions loom for Iran – UAE National – The high oil price predictions have started re-emerging in response to the US’s abandonment of the Iran nuclear deal. Saudi Arabia has quietly sounded out $80 or $100 per barrel, Bank of America has put forward $100 for 2019, and hedge fund manager Pierre Andurand suggested $300. Opec needs a strategy to prevent the market running away. Iran exports about 2.5 million barrels per day (bpd) of crude oil and condensate (derived from natural gas), although April sales were higher as it sought to drain storage ahead of the sanctions announcement. The Obama-era sanctions, which did not include condensate, reduced its exports by about 1 million bpd. The current unilateral measures, not supported by the EU, China or Russia, should have less impact. The market has already been going through a supply shock more consequential, so far, than the constraints on Iran. Venezuela, producing 2.1 million bpd in January 2017, was down to 1.5 million bpd in April and is now pegged at 1.41 million bpd as its economy collapses and oil workers go hungry or walk off the job. In pursuit of a $2 billion arbitration award, ConocoPhillips has begun seizing Venezuelan oil storage and terminals in the Caribbean, further hampering its exports. The combination of Venezuela’s travails with a so-far strong global economy, Saudi Arabia’s voluntarily under-producing its allocation and Angola’s falling below target as its fields mature has pushed up prices sharply. Now, the American abandonment of the Joint Comprehensive Plan of Action nuclear deal clouds the current accord between the “Vienna Group” of Opec, Russia and some other leading non-Opec producers. Political opinion in the amalgamation is divided between Tehran allies, notably Russia; those without a dog in the fight, such as Nigeria; those that have sought to steer a middle course, including Iraq, Oman and Kuwait; and those, led by Saudi Arabia and the UAE, that have been pushing the US for tougher action against Tehran. Iran will probably consider itself no longer bound by the deal if sanctions begin to bite, although that doesn’t matter practically if its exports are hampered below its allocated level of production.

In the Middle East right now, all sides in this complex battle are staring at each other with increasing concern – Robert Fisk – In the West, it’s easy to concentrate on each daily drama about the Middle East and forget the world in which the real people of the region live. The latest ravings of the American president on the Iran nuclear agreement – mercifully, at last, firmly opposed by the EU – obscure the lands of mass graves and tunnels in which the Muslim Middle East now exists. Even inside the area, there has now arisen an almost macabre disinterest in the suffering that has been inflicted here over the past six years. It’s Israel’s air strikes in Syria that now takes away the attention span. Yet take the discovery of dozens of corpses in a mass grave in Raqqa, Isis’s Syrian “capital”. It garnered scarcely three paragraphs in Arab papers last month, yet the 50 bodies recovered were real enough and there may be another 150 to be recovered. The corpses lay under a football pitch near a hospital which Isis fighters used before they fled the city – under an agreement with Kurdish forces – and could only be identified by markings which gave only their first names (if they were civilians) or their nom de guerre if they were jihadis. Who killed them? Even less space was given to another gruesome discovery last month in tunnels beneath the Syrian town of Douma, east of Damascus. This vast stone warren of underground streets wide enough for cars and trucks was found to contain 112 bodies, 30 of them Syrian soldiers, the rest probably civilians, many killed long ago, presumably by the Jaish al-Islam group which fought for the town for many years. Were they hostages for whom the Islamists wished to exchange prisoners? And then murdered when no deal was struck? My colleague Patrick Cockburn investigated an even more terrible mass killing outside Mosul which occurred in 2014, most of the victims Shia Iraqi soldiers. We know this because Isis filmed their appalling end, shot in the head and then tossed carelessly into the blood-stained waters of the Tigris, some of them floating far south towards Baghdad. Like the vast mass graves of Europe after the Second World War – especially in the Soviet Union – the memory of this savagery will not be forgotten. Which is why the Iraqi authorities (largely Shia in the case of “judicial” trials which meet no international standards) have been hanging Isis suspects like thrushes on prison gallows, 30 at a time, in the south of the country. And so it goes on.

Syria Imposes New Rules of Engagement on Israel – On Thursday 10th May 2018, an unprecedented exchange of strikes happened between Israel and Syria. The mainstream media, as well as some “alternative” media like Russia Today, were quick to relay the Israeli army version, according to which the Zionist entity “retaliated” to an “Iranian attack by Revolutionary Guards’ Al-Quds Force” consisting of “twenty rockets” fired at Israeli positions in the occupied Golan, four of which were “intercepted by the Iron Dome” and the others “crashed into Syrian territory”, no damage being recorded in Israel. Israel has reportedly responded to this unprecedented “act of aggression” by a “large-scale operation” that would have destroyed “the entire Iranian infrastructure in Syria”, in order to deter the Islamic Republic from any stray impulse of future strikes. This narrative takes for granted the postulates, data and myths of the Zionist entity’s propaganda – which imposes permanent military censorship on the Israeli media, exposing any offender to a prison sentence; and reading the international media, one might get the idea that, like American economic sanctions, this censorship is extraterritorial – but none of them can withstand scrutiny. The aggressor is undoubtedly Israel, who carried out more than a hundred strikes against Syria since the beginning of the conflict. After Duma’s chemical stage attacks, this aggresion intensified with attacks on the Syrian T-4 base on April 9, which killed 7 Iranian Revolutionary Guard. Following the US announcement of withdrawal from the Iran nuclear deal, new Israeli strikes targeted Syrian positions on Tuesday (May 8th) in the southern suburbs of Damascus, and Wednesday (May 9th) in Quneitra, in the south of the country. Undeniably, Syria has only responded to yet another aggression, with a firmness that has shaken Israel and forced it out of the muteness to which it usually confines itself. The Syrian – and not Iranian – response consisted of more than fifty – and not twenty – rockets against four sensitive Israeli military bases in the occupied Golan, which caused material damage and even casualties according to Al-Manar, Hezbollah’s media. These were not reported by the Israeli press because of the draconian military censorship forbidding mentioning Israel’s initial aggression, more than twenty rockets fired on Israel, the identification of their targets and any hint to the damage inflicted, in order to reassure the population inside and allow the vassal Western capitals to shout their sickening refrain of the sacrosanct-right-of-Israel-to-defend-itself. The Lebanese channel Al-Mayadeen specifically identified the military posts struck:

Get Ready for the New Middle East Battlefield: The Golan – The exchange of missiles last week on the Syrian-Israeli border was anything but normal. This firefight established new rules of engagement in the Levant, and made the Israeli-occupied Golan Heights an “operational theater” in the Syrian conflict overnight.The mainstream media’s version of events began with Israel retaliating against Iranian missile strikes, and the IDF (Israeli Defense Forces) destroying Iran’s military capabilities inside Syria. But that information is questionable: it comes almost exclusively from Israelis who rarely miss an opportunity to beat the “Iranian threat” war drum. A check of the actual conflict chronology shows that Israel initiated the incident by striking Syrian military targets in Kisweh (the Damascus suburbs) and Baath city (Quneitra) over the two preceding days. Russia had warned both Syria and Iran of the impending Israeli strike with the result that neither Iranian military personnel nor weapons systems appear to have been hit. The Syrian military (and not the IRGC) retaliated by firing 55 rockets at Israeli military outposts and installations in the occupied part of the Golan. Local Arab media identified these targets as key Israeli surveillance centers that crippled Israel’s “eyes and ears” along that vital demarcation line. Israel’s vaunted “Iron Dome” defense system failed to intercept most of these rockets, while the Syrian military intercepted more than half of Israel’s missiles, according to Russian military officials. What is undisputed: the military back-and-forth was the first major firefight between Syria and Israel in the occupied Golan Heights since 1973 – making the Golan an operational theater for the first time in over four decades. This is also the first time during the Syrian War that the Syrian military has retaliated against Israeli strikes by hitting Israeli military installations – not just the incoming missiles and the Israeli warplanes firing them. And finally, Israel must contend for the first time with the fact that any battle it initiates can be waged in its own backyard.

Israel Kills 55, Wounds 2,000 Gazans In “Terrible Massacre” As US Opens Jerusalem Embassy –The Israeli military continued its violent repression of Palestinian protesters on Monday when soldiers once again gunned down unarmed demonstrators whom it claimed were trying to penetrate the border fence separating Israel from the Gaza Strip. According to Italian newspaper Il Sole 24 Ore, Israeli soldiers said they were “provoked into violence” when small groups of Palestinians began throwing stones at IDF soldiers from the other side of the border fence. The soldiers responded by gunning down demonstrators; by the time the demonstrations had quieted down, at least 28 Palestinians had been killed, and another 600 had been wounded, according to the Hamas-controlled Health Ministry.The Wall Street Journal reported that a 12-year-old and a 14-year-old had been counted among the dead.At least 10,000 Palestinians had gathered early Monday local time along more than 10 locations along the border fence, which is one of several closed borders that has effectively cut off Gaza from the rest of the world (though Hamas has been known to dig tunnels to help people move in and out of the territory), Il Sole 24 Ore reported. The international community has widely condemned President Trump’s decision to move the US embassy to Jerusalem (though, as Trump has correctly pointed out, every US president since at least Bill Clinton had promised to move the embassy). The UK reiterated Monday that it doesn’t intend to move its embassy, adding that it doesn’t agree with President Trump’s decision. Update IV (4 pm ET): The death toll is now 55. The number wounded has climbed to more than 2,000.

Erdogan Blasts: “Terrorist State” Israel Is “Guilty Of Genocide”, Withdraws US Ambassador – While Turkish officials on Monday condemned Israel’s mass slaughter of Palestinian resident, Turkish President Recep Tayyip Erdogan offered perhaps his most scathing criticism yet, according to the Anadolu News Agency.In a scathing declaration, Erdogan blasted Israel’s killings as tantamount to genocide.He also declared that Israel is a “terrorist state” following the murder of 55 Palestinians, while also describing the killings as a “humanitarian tragedy.”“What Israel is doing is genocide,” he said. “We will continue to stand with the Palestinian people with determination. “We will not allow today to be the day the Muslim world loses Jerusalem…”After blasting the US for moving its embassy in Tel Aviv to Jerusalem on Monday – a decision that many foreign leaders have said will only further inflame tensions between Palestinians and Israelis – Erdogan, who is visiting the UK this week, also declared a three-day period of national mourning in solidarity with the captive residents of that Gaza Strip, who were fired on en masse during Monday’s demonstration, which led to more than 55 being killed at last count. Meanwhile, nearly 2,000 had been wounded.Turkey also called for an emergency meeting of the Organization of Islamic Cooperation to be held on Friday, according to Deputy Prime Minister Bekir Bozdag.Bozdag, who made the announcement after a Council of Ministers meeting in Ankara, said the US had “violated” United Nations Security Council resolutions by opening its embassy in Jerusalem on Monday.”Today will go down in the history as Bloody Monday for Muslims and Islamic countries,” Bozdag said. “Jerusalem’s historic and spiritual status will never change. As it was before, Jerusalem will continue to be independent Palestine’s capital.” Turkey also withdrew its ambassadors from Tel Aviv and Washington so they can attend the meeting.

Tension in Gaza as Palestinians begin to bury 58 dead – BBC News: Funerals are being held in Gaza after the deadliest day of violence there since a war in 2014. On Monday, 58 people were killed when Israeli troops opened fire during Palestinian protests. Tuesday is the 70th anniversary of what Palestinians call the Nakba – a mass displacement after Israel’s creation. Israel’s military said it was preparing for further confrontations on Tuesday ,but Palestinian groups indicated they intended to rein in the protests. Monday’s violence came as the US inaugurated its first embassy in Jerusalem, a controversial move that broke with decades of US policy and incensed Palestinians. Palestinians claim East Jerusalem as the capital of a future Palestinian state. Many see the US move as backing Israeli control over the whole of the city, which Israel regards as its indivisible capital. Palestinian officials said that as well as those killed, about 2,700 people had been injured in what they called a massacre. Israeli Prime Minister Benjamin Netanyahu said his military was acting in self-defence against Gaza’s Islamist rulers, Hamas, who seek to destroy Israel. Israel’s military said it had only fired at “targets of terrorist activity”. The UN human rights office was heavily critical of Israel’s use of force. “The mere fact of approaching a fence is not a lethal, life-threatening act, so that does not warrant being shot,” spokesman Rupert Colville told reporters in Geneva. “How much threat can a double amputee be making from the other side of a large fortified fence?” he asked – referring to a widely shared report that a wheelchair user was killed during the violence.

Doctors Without Borders Condemns the ‘Bloodbath’ in Gaza as a Result of Israel’s ‘Disproportionate Use of Violence’ — Doctors Without Borders released a statement Monday condemning the brutal attacks on unarmed protesters in Gaza by the Israeli military as demonstrations broke out at the border. Protesters opposed the opening of a new U.S. embassy for Israel in the city of Jerusalem, a move ordered by President Donald Trump.”What happened today is unacceptable and inhuman,” said spokeswoman Marie-Elisabeth Ingres. “The death toll provided this evening by Gaza health authorities – 55 dead and 2,271 wounded – including 1,359 wounded with live ammunition, is staggering. It is unbearable to witness such a massive number of unarmed people being shot in such a short time.”The organization has been treating victims of the violence since the protests began last month, but Ingres said that the doctors have been overwhelmed by the number of people needing care: “Our teams carried out more than 30 surgical interventions today, sometimes on two or three patients in the same operating theater, and even in the corridors. Ingres also made it clear that, despite the White House’s blaming of the killings on Hamas, Doctors Without Borders believes Israel’s policies are the cause of the brutality. “This bloodbath is the continuation of the Israeli army’s policy during the last seven weeks: shooting with live ammunition at demonstrators, on the assumption that anyone approaching the separation fence is a legitimate target,” she said. “As new demonstrations are announced for tomorrow, the Israeli army must stop its disproportionate use of violence against Palestinian protesters.”

Chinese state councilor, Iranian foreign minister hold talks – (Xinhua) — Chinese State Councilor and Foreign Minister Wang Yi held talks with Iranian Foreign Minister Mohammad Javad Zarif in Beijing on Sunday.Wang said China attaches importance to the traditional friendship with Iran, as well as the comprehensive strategic partnership between the two countries.China regards Iran as an important partner in the Belt and Road construction, Wang said, noting that China is willing to work with Iran to implement the consensus reached by leaders of the two countries to promote various cooperation.Wang said China firmly safeguard multilateralism and international agreements.The Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), was hard-earned and the deal helped to safeguard the international system of non-proliferation and maintain the peace and stability in the Middle East, Wang said.As an important party, China made a lot of work in the process of reaching and implementing the JCPOA, Wang said.”China will take an objective, fair and responsible attitude, keep communication and cooperation with all parties concerned, and continue to work to maintain the deal,” Wang said.

As Rosneft’s Vietnam unit drills in disputed area of South China Sea, Beijing issues warning (Reuters) – Rosneft Vietnam BV, a unit of Russian state oil firm Rosneft, is concerned that its recent drilling in an area of the South China Sea that is claimed by China could upset Beijing, two sources with direct knowledge of the situation told Reuters on Wednesday. Rosneft said on Tuesday its Vietnamese unit had started drilling at the LD-3P well, part of the Lan Do “Red Orchid” offshore gas field in Block 06.1, 370 kms (230 miles) southeast of Vietnam. The block is “within the area outlined by China’s nine-dash line,” according to energy consultancy and research firm Wood Mackenzie. When asked about the Reuters report of the drilling, China’s foreign ministry spokesman said that no country, organisation, company or individual can, without the permission of the Chinese government, carry out oil and gas exploration or exploitation activities in waters under Chinese jurisdiction. “We urge relevant parties to earnestly respect China’s sovereign and jurisdictional rights and not do anything that could impact bilateral relations or this region’s peace and stability,” the spokesman, Lu Kang, told a regular news briefing on Thursday. China’s U-shaped “nine-dash line” marks a vast expanse of the South China Sea that it claims, including large swathes of Vietnam’s Exclusive Economic Zone. Maps of the area indicate the block is around 85 kms (53 miles) inside the contested area. A series of dashes, the line is not continuous making China’s claims often ambiguous. In recent years, though, China has increasingly patrolled and enforced the area, claiming historic rights to the resources and features within it. In March, Vietnam halted an oil drilling project in the nearby “Red Emperor” block following pressure from China, sources told Reuters. That block is licensed to Spanish energy firm Repsol, which has asked Vietnam to pay compensation over the issue. The Vietnamese foreign ministry did not respond to a request from Reuters for comment.

China says no one can carry out oil, gas activities in the South China Sea Without Beijing’s Permission (Reuters) – China’s Foreign Ministry said on Thursday that no country, organization, company or individual can carry out oil and gas exploration or exploitation in Chinese waters without permission from Beijing. Ministry spokesman Lu Kang made the comment at a regular news briefing when asked about recent drilling by Rosneft Vietnam BV, a unit of Russian state oil firm Rosneft, in an area of the South China Sea that is claimed by China. “We urge relevant parties to earnestly respect China’s sovereign and jurisdictional rights and not do anything that could impact bilateral relations or this region’s peace and stability,” Lu said.

EU top diplomats agree to follow through Iran nuclear deal – (Xinhua) — European top diplomats on Tuesday agreed to follow through the landmark Iran nuclear deal despite U.S. President Donald Trump’s decision to withdraw last week, EU foreign policy chief Federica Mogherini told reporters on Tuesday.To this end, the EU will launch intensive discussion at all levels with Iran in next few weeks, Mogherini said at a press conference following a meeting with foreign ministers of Britain, Germany, France and Iran.The discussion will focus on, among others, how to maintain economic relations and effective banking transactions with Iran in the context of renewed U.S sanctions, according to Mogherini.”We reaffirm our resolve to continue to implement the nuclear deal in all its parts, in good faith, and in a constructive atmosphere,” said Mogherini.”We are determined to ensure that Iran Deal stays in place. We know it’s a difficult task but we are determined to do that,” Mogherini noted, adding “we started to work to put in place measures that help ensure that this happens.”She proclaimed that she will brief leaders of EU members states on Wednesday in Sofia, Bulgaria, which is about to host the EU-Western Balkan summit.

Europe Is Seeking “Practical Solution” To Salvage Iran Deal – Much to President Trump’s chagrin, The European Union’s top diplomat, Federica Mogherini, said on Tuesday that the bloc would seek avenues for protecting businesses operating in Iran – even as the US threatens to impose tighter sanctions on any company that dares to continue operating in Iran after the US has revived its economic sanctions. While it couldn’t provide any economic or legal guarantees to the Islamic Republic, Mogherini said they would find a way to keep badly needed investment flowing into Iran. A series of experts have been assigned to the issue, and they’re expected to propose a few options in the coming weeks. “We are working on finding a practical solution,” Mogherini told a news conference.“We are talking about solutions to keep the deal alive,” she said, adding that measures would seek to allow Iran to keep exporting oil and for European banks to operate.The EU has already warned the US that it’s prepared to impose “counter-sanctions” if the US interferes with European firms who choose to maintain their business relationships in Iran, as President Trump threatened to do in a phone call with European leaders shortly before he announced the US’s withdrawal from the agreement, according to Reuters.Iranian President Hassan Rouhani surprised the other signatories of the Joint Comprehensive Plan of Action last week when he said Iran would continue to abide by the terms of the deal – for now, at least – and give the other signatories a chance to salvage it.Both Russia and China have expressed regret over the US’s decision. Both have vowed to maintain ties with Iran in accordance with the deal.

EU Launches Rebellion Against Trump’s Iran Sanctions, Bans European Companies From Complying – Following our discussion of Europe’s angry response to Trump’s unilateral Iran sanctions, in which European Union budget commissioner, Guenther Oettinger made it clear that Europe will not be viewed as a vassal state of the US, stating that “Trump despises weaklings. If we back down step by step, if we acquiesce, if we become a kind of junior partner of the US then we are lost”, moments ago Reuters reported that the European Commission is set to launch tomorrow the process of activating a law that bans European companies from complying with U.S. sanctions against Iran and does not recognise any court rulings that enforce American penalties.”As the European Commission we have the duty to protect European companies. We now need to act and this is why we are launching the process of to activate the ‘blocking statute’ from 1996. We will do that tomorrow morning at 1030,” European Commission President Jean-Claude Juncker said.Speaking at news conference after a meeting of EU leaders in Bulgaria, Juncker added that he “also decided to allow the European Investment Bank to facilitate European companies’ investment in Iran. The Commission itself will maintain its cooperation will Iran.”Europe’s hardline position will infuriate Trump, as Brussels effectively nullifying US sanctions will prompt a violent outburst from Trump, who needs Europe on his side for US sanctions of Iran to have any chance of succeeding.Perhaps sensing what is coming, French President Emmanuel Macron took a slightly softer tone, and said that the French defense of Iran nuclear accord is based on concerns about security and stability, not commerce, and that the deal should be supplemented and it is necessary to continue negotiations, including on missile program. The French president said that “the European Union decided to preserve the nuclear deal and defend EU companies” adding that “our main interest in Iran is not in trade, but in ensuring stability in the region, at the same time, we will not become an ally of Iran against the US.”

How Europe Can Keep Money Flowing to Iran – The determination of European nations, Russia and China to keep the 2015 nuclear agreement with Iran alive isn’t necessarily futile. Europe has more influence than the U.S. on SWIFT, the Brussels-based global payments network. SWIFT is owned by its members and provides the backbone of modern international banking, carrying more than 30 million transaction-related messages a day among 11,000 banks. Because it is based in Brussels, it is subject to European Union laws. In 2012, the EU imposed sanctions on Iranian banks, and SWIFT expelled 30 Iranian members, including the country’s central bank. . With the loss of access to SWIFT in 2012, Iran lost the ability to be paid for its exports and to pay for imports. Domestically, Iranian companies had to revert to the old, slow and expensive hawala transfer system – a major inconvenience for ordinary people as well as merchants. Even though President Donald Trump announced earlier this month that the U.S. was withdrawing from the 2015 pact that eased sanctions in exchange for Iran’s commitment to curb its nuclear program, the EU, Germany, France, the U.K., China and Russia remain parties to the deal. This means SWIFT isn’t required to kick Iranian banks off its network again. The cooperative says it’ll be consulting with regulators on both sides of the Atlantic, but it’s highly unlikely it will act unless the EU does. The U.S. sanctions will inevitably bite and multinationals with U.S. operations won’t be able to invest in Iran, but the Islamic Republic wouldn’t be under life-threatening pressure if it can keep exporting oil. This means Europe – already locked in a dispute with the U.S. because of a threat to impose high tariffs on European steel and aluminum exports – doesn’t have to take Trump’s Iran move lying down. If the EU refrains from excluding Iran from SWIFT, the U.S. could sanction the cooperative, but that could prove harmful to American interests as it would have major consequences for the global financial system. If SWIFT becomes unreliable, there would be huge demand for alternative transaction information systems such as those offered by blockchain startups and authoritarian states to fill the void.