Oil, Gas, And Fracking News Reads 07July 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 07 July 2018. Go here for Part 1.

This is a feature at Global Economic Intersection every Monday evening.

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US crude by rail traffic rebounds in 1Q – Every US railroad reported an increase in crude carloads during the first quarter, as the total number reported by all seven Class I carriers rose to its highest level since late 2016.The major North American railroads combined for 88,571 crude carloads in the US, according to the latest data available from the Surface Transportation Board. That is up from 79,891 in the last quarter of 2017 but still well shy of the record 242,149 in the third quarter of 2014.Crude-by-rail leader BNSF, which dominates Bakken crude movements out of the Williston basin centered in North Dakota, reported 39,799 crude carloads in the first three months of 2018, down from 39,937 in the year-prior period and 106,534 in the fall of 2014.BNSF crude carloads plunged to 23,981 in the third quarter of 2017 upon the inauguration of the 525,000 b/d Dakota Access pipeline to Patoka, Illinois, and Nederland, Texas. But growing production in the Williston basin along with continued profitable rail movements to some destinations – mostly the west coast but increasingly the east coast – helped boost volumes in the ensuing quarters.BNSF, along with fellow western US railroad Union Pacific (UP), also can pick up crude from Canada and deliver it to the increasingly busy USD Group terminal at Stroud, Oklahoma. Last week it was a BNSF train hauling Canadian crude that derailed in Iowa, causing 32 cars to topple and leak oil into the Little Rock river. UP reported 7,710 crude carloads in the first quarter, its highest-volume quarter since the third quarter of 2016. UP, a Bakken crude-by-rail pioneer earlier this decade, had seen volumes decline as the US Gulf coast became a less viable destination as pipeline capacity rose.

Canadian crude-by-rail volumes reach record level of 193,468 b/d in April: NEB – Steadily wide differentials have sent crude-by-rail volumes out ofAlberta and Saskatchewan to refineries in the US and East Coast Canada29% higher year on year to 193,468 b/d in April, the National EnergyBoard said in its latest report. This figure is likely to rise in the coming six months as railroads signmore offtake contracts and deploy resources, industry officials saidMonday. Volumes loaded on rail cars were 149,903 b/d in April 2017, the NEB said. The April 2018 volume was the highest since 2012 and compared with178,989 b/d and 175,654 b/d in September 2014 and December 2014respectively, a study of the NEB data showed. A wider differential can help account for costly rail economics. WesternCanadian Select differentials averaged a $24.50/b discount to WTI overMarch, S&P Global Platts data shows. That spread narrowed to around $17/bin April and May, before widening back out to $21/b over June. “The high volumes indicate multiple unit trains are now being hauled outof Western Canada each day, with bigger producers now loading theirbarrels at the Edmonton and Hardisty loading terminals due to the[continuing] restriction in pipeline takeaway capacity,” said SandyFielden, an analyst with Morningstar. A unit train comprises of roughly 100 cars with each tank car capable ofshipping some 650 barrels depending on the quality of crude. Fielden did not name any major producer, but ConocoPhillips said lateJune it was shipping crude from its oil sands facilities in Alberta inrail cars to Stroud in Oklahoma. ConocoPhillips is the operator of the Surmont oil sands facility inAlberta of current gross capacity 140,000 b/d.

Syncrude Outage Churns Market — The outage of Syncrude’s 350,000 barrel per day upgrader in Alberta, Canada is roiling markets. The facility experienced a power outage late in June and is expected to be off line through July, which means refiners in the US Midcontinent are scrambling to replace the lost supply of light, sweet barrels. The results are wide-ranging and potentially long-lasting. Taking Syncrude out of pipelines helps alleviate bottlenecks facing heavier grades, tightening the differential between light and heavy crude. The outage has also reversed recent price spreads as barrels at Cushing, Oklahoma and along the US Gulf Coast must be incentivized to move north rather than to tidewater. Brent’s premium to West Texas Intermediate (WTI) has been slashed almost in half, and what at first glance looks like a relatively minor disruption to supply could slow down burgeoning US crude oil exports. In addition, the forward curve for WTI is getting more volatile as the market prices in the implications of going at least 31 days without access to Syncrude.

Enbridge Selling BC, Alberta Natural Gas Midstream Operations for $3.3B – Production gathering pipelines and processing plants in Canadian natural gas hot spots changed hands Wednesday, when Enbridge Inc. sold field operations in northern British Columbia (BC) and Alberta for C$4.3 billion ($3.3 billion). The leader of the buyer consortium, Toronto-based Brookfield Infrastructure Partners, called the deal “an exciting opportunity to invest in scale in one of North America’s leading gas gathering and processing businesses based in Western Canada.” The asset package includes 3,350 kilometers (2,010 miles) of pipelines that supply 19 processing sites with 3.3 Bcf/d of raw liquids-rich natural gas from the Montney, Peace River Arch, Horn River and Liard geological formations. “The business is strategically positioned for the continued development of the prolific Montney Basin,” the richest and most active area in the acquired midstream service network, said Brookfield CEO Sam Pollock. Calgary-based Enbridge kept long-haul routes to markets from the northern gas-rich areas: the Westcoast conduits to southwestern BC and the northwestern United States, and an interest in the Alliance Pipeline to Chicago. Enbridge acquired the Westcoast system and allied northern field services in its mid-2016 takeover of Spectra Energy for US$28 billion. The asset sale was sought to repay takeover debt and clean up the corporate profile on investment markets. The deal raises Enbridge’s total asset sales so far this year to C$7.5 billion ($6 billion).

Canada becomes competitor to Gulf Coast petrochemical industry – Even a short drive east from Houston toward Baytown shows how the U.S. shale boom is transforming the Gulf Coast. Dense clusters of petrochemical plants, with their towering chemical reactors and mazes of pipes, line roads busy with semi-trucks hauling the goods needed to keep the industry running. Construction cranes promise more development to come. Not so in Canada, where petrochemicals investments have slowed in recent years despite the country’s vast reserves of low-cost natural gas feedstock for plastics and other products. The reason is obvious: Compared to the Gulf Coast, Canada has limited port access, higher costs of building and carbon taxes in its four most populous provinces. But Canada is pushing to change that dynamic, vying to become more competitive with its neighbor at a time when U.S. trade policy and tariffs threaten to increase the cost of building and expanding Gulf Coast petrochemical plants. In June, the provincial government of Alberta offered petrochemical companies the chance to apply for a range of multi-million-dollar incentives to develop reserves of natural gas-derived chemical feedstocks – namely ethane, methane and propane – and process them into plastics and other materials. It was the latest in a series of incentive packages Alberta has offered to offset the higher costs of operating there. A recent analysis by research firm WoodMackenzie showed the push has already created new development opportunities in Canada, pitting it against the U.S., the Middle East and China in the race to build new plants. Last year, during an Alberta’s first incentive push, companies applied for assistance with 16 projects worth $20 billion.

Campaigners call for fracking moratorium in former mining areas after new report reveals shale gas plans overlooked key geological data – Fracking companies have failed to use all available geological data when applying for planning permission, according to a report launched at Westminster this afternoon. The study, by a former Downing Street adviser, shows that historic coal mining data has been overlooked or ignored. It calls on planning committees to consider detailed maps of faults when deciding applications. Anti-fracking campaigners have called for a moratorium on fracking in mining areas and a public investigation. The report’s author is Professor Peter Styles, a former President of the Geological Society of London and Head of Geology at Keele University. He established the link between fracking at Cuadrilla’s Preese Hall well and the Blackpool earthquakes of 2011. He also advised David Cameron on seismic regulation of fracking. He concluded:“It is critical that this high resolution, carefully mapped data set should be included in any planning process for unconventional oil and gas activities.”In an interview with DrillOrDrop last month, he warned of the risks of fracking near geological faults in former coal mining areas. The said the operation could trigger earthquakes and should not take place without assessment of all available geological data.He recommended a gap of 850m – described as a respect distance – between fracking wells and known faults. His report, launched this afternoon to MPs and peers at the Houses of Parliament, overlaid historic mining data from South Yorkshire and North East Derbyshire, where Ineos proposes to drill for shale gas, onto maps from the British Geological Survey (BGS), which show only major fault lines.

Another Pre-Summit Dividend – No Sanctions On Nordstream 2 – I hate to say “I told you so,” but, “I told you so.” There will be no sanctions on the Nordstream 2 pipeline. The reason is because sanctions won’t stop the project at this point. Sputnik is reporting that the U.S. has told the German Economic Ministry there will be no sanctions on Russian pipeline projects. If true then this is an indication that we just about reached the peak of Trump’s full-court press on the economic health of the planet through financial control. I’ve been steadfast in my position that sanctions are not only an act of war but also, ultimately, have limits. And once those limits are reached all that is left is the face-saving. And since the first rule of being a politician is never back down no major policy can be reversed without a means to save face.Look at the situation Angela Merkel is facing in Germany. She can’t cave on Nordstream 2 because she will look like a weak U.S. quisling (which she is). She can’t reverse sanctions on Russia over Crimea because there has been no movement towards implementing the Minsk II accord. And she can’t back down over her immigration policy because it would betray the people who put her in power – the Soros Set.Trump has used this to pressure her ruthlessly on trade issues and NATO funding.As for Trump, he’s not said much directly about Nordstream 2. Members of his administration have, especially State Department Spokesperson Heather Nauert. They are the ones who would have to eat crow over Nordstream 2, not Trump. Trump has made it clear he doesn’t like the project but I think that’s more about his desire to bring Germany low rather than stifle Russia. The worry is that Germany, through Nordstream 2 and no more supply coming from Ukraine, would then control eastern European politics by having control of their gas supplies. This, I believe, is now the main focus for Poland in their fight to retain some semblance of sovereignty from the EU. This is why Poland continues to overpay for Qatari and U.S. LNG as well as invest in a new pipeline from Norway. But, that said, Trump knows that Europe’s future gas market is big enough to ensure, if indirectly, a market for U.S. LNG. So, Russia’s dominance in Europe is not something he can compete with in the long run.

Gazprom boosts natural gas production to solidify top position in Europe – Gazprom increased gas production by 8.7 percent in the first half of 2018, compared to the same period last year, to 253 billion cubic meters. Exports to Europe increased by 5.8 percent to 101.2 billion cubic meters. Through June this year, Gazprom’s exports to Germany increased by 12.4 percent, to Austria – by 1.5 times, to the Netherlands – by almost 1.7 times, to France – by 13 percent, to Croatia – by 1.5 times. Supplies to Poland grew by 6.9 percent. Earlier, the head of Gazprom, Aleksey Miller, said that gas exports to Europe could reach a record 200 billion cubic meters this year. Miller also noted that LNG supplies from the United States will never substitute Russian fuel in Europe. “America will never catch up and will not overtake Russia in delivering LNG to the European market. The reason for this is that price and reliability of supplies are crucial for consumers,” and Gazprom is leading there, he said.

The 1,600 olive trees holding up a $5.2 billion pipeline – On a recent visit to a construction site near an olive grove along the coast of southern Italy, a reporter’s phone buzzed with an ominous text message: “We know you’re there.” The text came from one of the people fighting to stop the final construction of a 4.5 billion-euro ($5.2 billion) natural gas pipeline that’s designed to run right beneath the olive trees, an area farmed for centuries and now surrounded by barbed-wire fencing. They have been working in shifts, monitoring progress of a project meant to carry gas from the Caspian Sea and provide the cornerstone of a European Union plan to wean itself off Russian gas. Now their yearslong fight to block the Trans-Adriatic Pipeline, known as TAP, has been given a boost. The ministers in Italy’s new government have threatened to put the project under review, aligning more with the protesters than the companies working on the pipeline, including British oil giant BP Plc and Italy’s state-owned gas company, Snam SpA. The threats have thrown into question whether the final stretch will be ready by the planned 2020 deadline – or completed at all. The companies that invested in TAP and the larger pipeline it connects with could face billions in losses if the project is delayed, said Elchin Mammadov, a utilities analyst at Bloomberg Intelligence. “There is a 90% probability that it will not be ready,” he said. On Wednesday, the board of the London-based European Bank for Reconstruction and Development gave the project a vote of confidence, approving a loan of up to 500 million euros and saying the initial annual capacity of 10 billion cubic meters of natural gas would be enough for 7 million European households. What began as a squabble about olive groves has grown into a larger protest against globalization, a theme that courses through populist rhetoric.

China keeps LNG off tariff list for now, could be trade weapon later (Reuters) – China’s omission of liquefied natural gas (LNG) from its vast list of U.S. products that face hefty import duties from Friday has preserved a potential weapon should the trade war with Washington deepen. It also underscores Beijing’s desire to ensure supplies of gas as it pushes to switch millions of households and businesses away from using coal as a key part of its ‘war on pollution’. China will on Friday impose tariffs on $34 billion of U.S. goods from pork to soybeans to cotton in retaliation for a similar move by Washington as trade relations sour between the world’s top two economies. “If the (trade) war escalates, (I expect) the government will not hesitate to add LNG,” a state oil and gas company executive said, declining to be identified due to the sensitivity of the issue. Although U.S. LNG supplies to China have so far been tiny in volume and value compared with the around $12 billion per year of U.S. crude that arrives in the country, analysts say those levels could be set to shoot up as Beijing forges ahead with its battle to clear its skies. Morgan Stanley has estimated annual Chinese imports of U.S. LNG could rise to as much as $9 billion within two or three years, from $1 billion in 2017. The amount could be even larger if the United States resolves a logistics bottleneck. That would go a long way to helping balance China’s trade surplus with the United States, a major bugbear of Washington’s in the trade dispute. But the strategy also hands Beijing another weapon in its arsenal if the spat deteriorates further. China’s Commerce Ministry did not immediately respond to requests for comment. FILE PHOTO: A Sinopec worker walks past liquified natural gas (LNG) storage tanks at Sinopec’s LNG terminal in Tianjin, China February 6, 2018. REUTERS/Stringer/File PhotoHowever, some industry sources said the country would feel the impact of any increased tariffs on U.S. LNG, as there are a limited number of major alternative suppliers.

Ghost ships no more: Explorers resume oil, gas search as prices perk up (Reuters) – A growing fleet of ships is scanning oceans in search of new oil and gas fields as energy companies, now with more cash thanks to stronger crude prices, gradually resume spending on seismic services after a four-year downturn. A doubling in the area contracted for seismic work in the first quarter this year from the last three months of 2017 has injected optimism into surveillance firms, with a global fleet of about 24 vessels, most of whom struggled to survive in the past years. But they say the road to recovery remains bumpy with producers big and small not keen on drilling for new reserves unless oil prices, which have more than doubled from 2016 lows, stay high for at least a year. Still, with crude prices stabilizing well above $60 a barrel in the past six months, companies including mid- and small-sized independents such as Woodside Petroleum, Kosmos Energy and Tullow Oil have helped boost demand for surveillance. The total area tendered by upstream companies for seismic work doubled to 40,000 square kilometres in the first quarter this year from October-December last year, said Duncan Eley, chief executive officer at Polarcus, which owns a seismic fleet. “That’s positive in isolation,” said Eley, keeping his optimism in check even as he pointed to a busy fourth quarter for geophysical work in Asia Pacific, particularly for gas with demand forecast to soar in coming decades. Gas projects in Myanmar could take two to three vessels from the global fleet, while there are also potential activities in Malaysia, Australia, India and Papua New Guinea, where Exxon Mobil and Total plan to feed more gas into their existing liquefied natural gas infrastructure, Eley said. That marks a stark change from the dark days of 2015 and 2016 when orders for geophysical survey work came to a grinding halt as oil prices plummeted from over $100 a barrel to less than $50. Petroleum Geo Services (PGS), the world’s largest seismic operator, was also seeing better opportunities now than last year. “The recent increases we’ve seen are primarily driven by Africa and Brazil when it comes to bidding for contract work,” said Bård Stenberg, PGS’ senior vice president for investor relations and communication.

Venezuela Says China Investing $250 Million to Boost Oil Output – Venezuela’s distressed oil sector may get some much needed financing from China, Finance Minister Simon Zerpa said after meetings with officials from China Development Bank and China National Petroleum Corporation. China Development Bank will invest more than $250 million to boost Venezuela oil production in the Orinoco Belt, Zerpa, who is currently in Beijing for bilateral talks, said in a ministry statement. “We’ve received the authorization for a direct investment of more than $250 million from China Development Bank to increase PDVSA production, and we’re already putting together financing for a special loan that China’s government is granting Venezuela for $5 billion for direct investments in production,” Zerpa said. The two countries will sign an additional three or four financing deals in the coming weeks, he said.Venezuela’s oil output averaged 2.9 million barrels a day in 2013, when President Nicolas Maduro was first elected. In June, output dropped to around 1.36 million barrels per day, according to International Energy Agency data. State oil company PDVSA has been struggling to send oil shipments to China after a legal order granted to ConocoPhillips froze its assets in Caribbean ports and terminals.Maduro has vowed to boost production by 1 million additional barrels, while critics say output will plummet to 1 million barrels a day by the end of 2018. Venezuela and China officials will continue meetings Wednesday, the ministry said in its statement. Zerpa, who has served in the post since October, was sanctioned by the U.S. Treasury Department before his appointment.

Turkey Defies Trump, Will Keep Importing Iranian Crude – Defying the Trump administration, Turkey said it would ignore the State Department’s call on US allies to stop importing Iranian crude oil by November 4, when the latest sanctions against Iran are set to kick in. Earlier this week, the State Department called on all US allies to completely stop buying Iranian crude, sending the price of oil to 4 year highs in the process. While many are trying to find a way around the sanctions, it is for now proving tricky, and many buyers are winding down their purchases of Iranian crude.But not Turkey.”The decisions taken by the United States on this issue are not binding for us. Of course, we will follow the United Nations on its decision. Other than this, we will only follow our own national interests,” Turkey’s Economy Minister Nihat Zeybekci said according to Turkish daily Hurriyet, adding that “we will pay attention so our friend Iran will not face any unfair actions.” Turkey is hardly alone in its defiance: oil importers including Japan, South Korea, and India, as well as European countries have said they will continue buying Iranian crude, although whether they will really do that remains to be seen – French oil giant Total has already stopped purchasing Iranian products.The European Union is particularly concerned about the situation because not only because it relies on substantial Iranian imports, but because there is only so much that the three European signatories to the Iran nuclear deal could do to prevent Tehran from exiting it, which might happen if it stops seeing benefits from it, President Hassan Rouhani said.

Turkey And India Have Leverage In Trump’s Iran Sanction War – Both India and Turkey have said they will defy President Trump’s call for them to stop buying Iranian oil once the U.S. reapplies sanctions in November. That isn’t really news. Both of them defied the Obama administration in 2012, albeit in different way. Turkey changed its banking rules to monetize gold and used its gold reserves as a means to launder Iranian oil payments for third parties through its banking system. India bypassed cutting off Iran from the U.S. dollar by beginning a goods-for-oil swap program. Today, however, the geopolitical background is far different. Today, Iran can and does list its oil for sale in Shanghai’s futures market payable in Chinese Yuan. Turkey can recycle its Yuan it receives from its large trade deficit with China to up its purchases of Iranian oil if need be. But, more importantly, both India and Turkey have geopolitical freedoms they didn’t have in 2012. I have covered the Turkey angle on this at length. India, on the other hand, I haven’t. Iran has become Turkey’s biggest oil importer. Turkey, a NATO ally, is dependent on imports for almost all of its energy needs. In the first four months of this year, Turkey bought 3.077 million tons of crude oil from Iran, almost 55 percent of its total crude supplies, according to data from Turkey’s Energy Market Regulatory Agency (EPDK). President Recep Tayyip ErdoÄŸan last year said Turkey was looking to raise the volume of its annual trade with Iran to $30 billion from $10 billion. And it doesn’t look like this will change with Trump’s sanctions.

How The Iran Sanctions Drama Intersects With OPEC-Plus – Major states buying oil from Iran are unlikely to heed the US call to drop imports; key allies want a waiver to avoid sanctions; OPEC, meanwhile, will have trouble boosting output in the short-term; the puzzle is not solved, but there are dark clouds… History may have registered stranger geoeconomic bedfellows. But in the current OPEC-plus world, the rules of the game are now de facto controlled by OPEC powerhouse Saudi Arabia in concert with non-OPEC Russia. Russia may even join OPEC as an associate member. There’s a key clause in the bilateral Riyadh-Moscow agreement stipulating that joint interventions to raise or lower oil production now are the new norm. Some major OPEC members are not exactly pleased. At the recent meeting in Vienna, three member states – Iran, Iraq and Venezuela – tried, but did not manage to veto the drive for increased production. Venezuela’s production is actually declining. Iran, facing a tacit US declaration of economic war, is hard-pressed to increase production. And Iraq’s will need time to boost output. Goldman Sachs insists: “The oil market remains in deficit… requiring higher core OPEC and Russia production to avoid a stock-out by year-end.” Goldman Sachs expects production by OPEC and Russia to rise by 1.3 million barrels a day by the end of 2019. Persian Gulf traders have told Asia Times that’s unrealistic: “Goldman Sachs does not have the figures to assert the capability of Russia and Saudi Arabia to produce so much oil. At most, that would be a million barrels a day. And it is doubtful Russia will seek to damage Iran even if they had the capacity.” In theory, Russia and Iran, both under US sanctions, coordinate their energy policy. Both are interested in countering the US shale industry. Top energy analysts consider that only with oil at $100 a barrel will fracking become highly profitable. And oil and gas generated via fracked in the US is a short-term thing; it will largely be exhausted in 15 years. Moreover, the real story may be that shale oil is, in the end, nothing but a Ponzi scheme. Yet the game drastically changes when Venezuela loses a million barrels a day in production and Iran, under upcoming sanctions, may lose another million. As Asia Times has reported, OPEC (plus Russia) can at best increase their production by 1 million barrels a day.

New Unrest Roils Iran as U.S. Ramps Up Pressure – WSJ — Spreading unrest in Iran raises the prospect of broader antigovernment protests as the political leadership in Tehran faces mounting pressure from a Trump administration effort to cut the country’s oil sales. Hundreds of people took to the streets in the southwestern city of Khorramshahr over the weekend in a demonstration prompted by anger at dirty drinking water that turned into an expression of broader grievances against the government in Tehran. The upheaval came after thousands of people swarmed Tehran’s Grand Bazaar last week, as the government of Iranian President Hassan Rouhani struggles to deal with soaring unemployment, a collapsing currency and other economic woes. Businesses in the bazaar shut down for days. In Khorramshahr, a video shared Friday on social media showed large crowds chanting “Death to Rouhani.” Other videos that purported to capture the events of the weekend showed people clashing with security forces and setting fires in the street. What appeared to be gunfire could be heard in the background of some. The videos couldn’t be independently verified. An Iranian interior ministry official said 10 police officers were injured in clashes on Saturday. Iranian authorities said no one had died.

US eases off of Iran oil ultimatum: Update – The US administration today backed away from its earlier insistence that countries eliminate all crude purchases from Iran by 4 November. Officials had pledged to target countries that fail to reduce their oil purchases from Iran to zero within four months. But today the State Department said the US will consider granting some waivers to the sanctions on Iranian crude sales. “Our focus is on getting as many countries importing Iranian crude down to zero as quickly as possible,” State Department policy planning chief Brian Hook said. “We are not looking to grant licenses and waivers broadly, but we are prepared to work with countries that are reducing their imports on a case by case basis.”Confusing messages last week from the US administration on the intensity of Iran sanctions have upended global oil markets. A background briefing by the State Department on 26 June, ruling out the possibility of waivers from the US’ sanctions on Iran that go into effect on 4 November, sparked a surge in oil futures prices – something Washington has been at pains to avoid.Today’s briefing seemed an attempt at damage control. “Our goal with respect to the energy sanctions is to increase pressure on the Iranian regime by reducing to zero its revenue from crude oil sales,” Hook said. “We are working to minimize disruptions to the global oil markets. We are confident there is sufficient spare global oil production capacity.” US law requires there be sufficient production capacity as a prerequisite for enforcing sanctions on Iran’s oil sector. The White House in May, following President Donald Trump’s decision to reimpose sanctions on Iran, informedCongress that enough crude supply is available globally to enable buyers of Iranian crude to significantly reduce imports from that country.

Saudis agree to boost output by 2mn b/d: Trump — US president Donald Trump says he has extracted a pledge from Saudi Arabia’s King Salman bin Abdel-Aziz to boost that country’s oil output by up to 2mn b/d to make up for Iranian and Venezuelan production losses.Trump made the announcement via Twitter. “Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction (sic) in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to (sic) high! He has agreed!”The Saudi version of the conversation, relayed via the official Saudi Press Agency, said that the leaders “stressed the need to make efforts to maintain the stability of oil markets, the growth of the global economy, and the efforts of producing countries to compensate for any potential shortage of supplies.”Global oil markets have been upended by the US insistence earlier this week that foreign buyers of Iranian crude eliminate their imports from that country – about 2.39mn b/d in May – by November as Washington enforces sanctions on Tehran. The timing coincides with the midterm congressional election in the US, with Republicans defending their control of both the House of Representatives and the Senate. Saudi Arabia already was preparing to boost its production to 10.8mn b/d in July, an increase of nearly 800,000 b/d from May, as assessed by Argus. That target level already would have marked record high Saudi output. An agreement to boost output by 2mn b/d would, theoretically, take Saudi production to 12mn b/d – a level cutting close to the Saudi-claimed production capacity of 12.5mn b/d. Separately, Russia is preparing to increase production by 200,000 b/d.

Oil Tumbles After Al Jazeera Reports Saudis Agree To Trump Demand To Pump More Oil – With oil rising to the highest price since November 2014 less than an hour ago, with WTI hitting $75, oil suddenly tumbled on what appeared to be no news, prompting traders to ask if the US had sold even more oil from the SPR.It turns out the reason is to be found in an article published moments ago by Al Jazeera, according to which the Saudis “have agreed to US demands to pump more oil”, and which quoted the official Saudi Press Agency that Saudi Arabia’s cabinet on Tuesday “endorsed the kindgdom’s readiness to pump more oil to maintain market balance and stability.””The kingdom is prepared to utilise its spare production capacity when necessary to deal with any future changes in the levels of supply and demand,” a cabinet statement said, following a meeting chaired by King Salman.Some more details from the Al Jazeera report:US President Donald Trump on Saturday said Saudi Arabia’s King Salman had agreed to his request to increase oil output “maybe up to” two million barrels. Trump said the agreement was reached after a phone call with the Saudi King about oil production but mentioned no specifics.Both leaders also discussed “efforts by the oil-producing countries to compensate for any potential shortage in supplies,” SPA reported. Trump’s claim comes after the Organization of the Petroleum Exporting Countries (OPEC), a grouping of oil-producing states that includes Saudi Arabia, already agreed to ramp up production by a million barrels a day at a meeting earlier this month. If the Saudis are indeed prepared to cave to Trump, it creates an existential threat to OPEC which may see Iran and other members quit immediately, if Riyadh has made a unilateral decision to pump more. Iran’s OPEC governor, Hossein Kazempour Ardebili, accused the United States and Saudi Arabia of trying to push up oil prices and said both countries are acting against the foundation of OPEC.

White House, Saudi Arabia Pour Cold Water On Trump’s “Saudi Deal” – On Saturday morning, president Trump triumphantly tweeted that following a phone call with the Saudi King, OPEC’s largest producer had conceded and in defiance of the OPEC agreement reached just last week, had agreed to pump as much as 2 million barrels of oil extra in an attempt to lower prices:“Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference … Prices to high! He has agreed!”However, subsequent remarks by both the White House and Saudi Arabia via Reuters curbed Trump’s enthusiasm. In a statement issued by the White House late on Saturday, it said that the White House said that the Saudi king had promised President Donald Trump that he can raise oil production if needed and the country has 2 million barrels per day of spare capacity.“King Salman affirmed that the Kingdom maintains a two million barrel per day spare capacity, which it will prudently use if and when necessary to ensure market balance.”No guarantees, no promises, just a vague reference to what many believe is peak, or even beyond, Saudi oil production.As a reminder, Trump’s comments came just one week after Saudi Arabia along with the rest of OPEC nations including Russia had agreed on June 22 to boost production by a combined 700,000 to 1 million barrels a day, so any 2 million bpd-increase would be at least double market expectations, prompting a furious backlash from the likes of Iran. According to a Bloomberg report last week, Saudi Arabia would shoulder the bulk of this excess production, boosting output by a little under 1mmb/d to a record high 10.8mmb/d from the current 10mmb/d pace.

Saudi Crude Oil Production — Summer — Part 2 — June 30, 2018 –Yesterday I mentioned that we were going to start seeing a lot of stories on increased crude oil production by Saudi Arabia. In anticipation of that, I posted part 1 of a 2-part series on this subject. This is part 2. Observations / data points:

• there’s a huge difference between production and exports
• right now, both President Trump and Saudi Arabia are talking about production, not exports
• US refiners are operating flat out, as fast as they can, operating at 97%+ capacity
• there’s already a 65-day global supply of crude oil; compare to about 23 days for the US; how much more oil does the world need
• right now there are four BP supertankers floating off the shore of China; oilprice opines that China teapots are unable to come up with the cash for these 8 million bbls of oil
• many years ago, on the blog, I clearly stated that I doubted the Saudis could significantly increase crude oil exports
• Saudi always increases production in the summer: they use crude oil to generate electricity for air conditioning and the hottest Arabian days are yet to come; see this post from June, 2015;
• we’re not quite there yet, but since 2015, there has been a huge course correction in Saudi’s strategic plan; Prince Salman will increase domestic consumption by huge amounts for new petrochemical operations and refineries — see the Prince Salman plan linked at the sidebar at the right;
• the Saudi Aramco IPO continues to be delayed, probably for any number of reasons, not least of which Prince Salman said he needed $100-oil to launch that IPO; that was two years ago; we’re still nowhere close to $100-oil, though we are moving in that direction

OPEC oil output climbs in June as Saudi opens taps: Reuters survey (Reuters) – OPEC oil output rose last month as Saudi Arabia pumped at a near-record rate, a Reuters survey found on Monday, a sign the world’s top exporter is heeding calls from the United States and other consumers for more oil. The Organization of the Petroleum Exporting Countries pumped 32.32 million barrels per day in June, the survey found, up 320,000 bpd from May. The June total is the highest since January 2018, according to Reuters surveys. Saudi Arabia’s move comes as U.S. President Donald Trump has been urging Riyadh to offset losses caused by new U.S. sanctions on Iran and to dampen prices, which this year hit $80 a barrel for the first time since 2014. OPEC and a group of non-OPEC countries agreed last month to return to 100 percent compliance with oil output cuts that began in January 2017, after months of underproduction by Venezuela and other countries pushed adherence above 160 percent. “We are entering the second half of the year with a huge amount of uncertainty surrounding the supply side of the equation,” said Tamas Varga of oil broker PVM. “Depending on your belief you could just as easily bet on $100 as $60 by the end of the year.” Saudi Arabia said the OPEC decision would translate into an output rise of about 1 million bpd, although the group’s statement gave no clear volume. A Reuters survey published on Friday showed Saudi Arabia had boosted supply to 10.70 million bpd in June, close to the record high of 10.72 million bpd, to make up shortfalls in Venezuela and other countries, and expected losses in Iran. This has lowered OPEC’s collective adherence with supply targets to 110 percent from 167 percent in May, meaning the group is still cutting more than agreed even after the Saudi increase. The Saudi supply boost, apparently set in train before OPEC met in Vienna on June 22 to discuss policy, has infuriated Iran and surprised some other OPEC members with its scale. Saudi Arabia’s Gulf allies, Kuwait and the United Arab Emirates, have yet to follow the Saudi lead, keeping output steady in June, the survey found.

Why Trump is pressing Saudi Arabia to lower oil prices: Kemp (Reuters) – The United States and Saudi Arabia appear to have reached an understanding: Washington will reduce or eliminate Iran’s oil export revenues and in return Riyadh will guarantee oil supplies and stabilise prices. The basic deal is well understood by policymakers in both countries, with U.S. President Donald Trump repeatedly emphasising his great personal relationship with the Saudi king and crown prince. But strong personal relationships between the leaders and agreement on the overall deal obscure disagreement on some key details, not least the desirable level for oil prices. Saudi Arabia and its allies believe prices should be stabilised around $75 a barrel. Trump, meanwhile, clearly thinks they should be stabilised at a significantly lower level. Trump made the link between Iran sanctions and Saudi production policy explicit in a television interview with Fox News on July 1. The United States will counter the influence of Iran, Saudi Arabia’s major regional rival, by imposing tough sanctions. In return Saudi Arabia will protect U.S. motorists against an increase in gasoline prices. “We are protecting those countries, many of those countries,” he said. In a follow-up Twitter message on July 4, the president said that “the United States defends many of those countries for very little $’s”. U.S. and Saudi objectives are not fully aligned, however, on oil prices. Saudi Arabia’s objective, revealed at the OPEC meeting in June, has been to stabilise production and prices around current levels. Trump, however, is not satisfied with either the current level of oil prices or the announced production increase. “They have to put out another 2 million barrels in my opinion,” he said in the July 1 Fox interview.

Saudi Spare Capacity Back in Market Spotlight With collapsing Venezuelan output, Iranian barrels at risk from US sanctions and other geopolitical disruptions potentially on the horizon, Saudi Arabia has assured nervous oil markets that it is waiting in the wings to help address any runaway supply shortfall. But is this easier said than done for Opec’s de facto kingpin? Political considerations aside, the kingdom has the technical capability to bring on an additional 2.25 million barrels per day of domestic supply and a further 250,000 b/d if its spat with Kuwait in the shared Neutral Zone is resolved. How quickly this capacity can be brought into production — and at what cost to its fields — is another matter. Saudi Arabia’s production is holding around 10 million b/d, down some 500,000 b/d as a result of its pledge to the Opec/non-Opec production cut agreement. While returning to its pre-alliance levels would give the market a quick fix that could offset much of the near-700,000 b/d Energy Intelligence estimates could come off line just from Iran by mid-2019, running much above 10.7 million b/d presents complications. When Saudi Arabia ran at such record levels in the recent past, Saudi industry sources told PIW it was a costly endeavor that strained its fields. Pushing output to full capacity would take months to implement and risk exhausting the kingdom’s fields if done for any extended length of time (PIW Aug.21’17). To potentially make this spare capacity less taxing to tap and more responsive, Saudi Aramco is prioritizing upstream investments that will significantly expand its offshore output even as its overall production capacity remains at 12.5 million b/d. The kingdom is also exploring international acquisitions in gas and LNG to free up crude barrels burned for power generation in the heat of the summer (PIW Feb.12’18). With more than half of its $300 billion spending program over the next decade headed offshore, the kingdom expects production from its three flagship developments, Marjan, Barri and Zuluf, will grow from 1.35 million b/d currently to 2.5 million b/d by 2022-23, offsetting declines at older onshore fields (PIW Aug.14’17). Aramco has already started rolling out tenders for several offshore field expansions, including Marjan and Barri, with awards expected by early 2019, industry sources say.

Opec’s Shrinking Spare Capacity Raises Risks — Mounting concern over future production declines led by Venezuela and Iran has flipped the oil market’s focus from tightening inventory levels to global spare capacity. To be sure, a severe supply crunch is not expected soon, as US output alone is able to meet the bulk of demand growth this year. But with spare capacity additions often needing significant investments and long lead times, the world will have to lean on its current production cushion for some time. And the picture is bleak. How much spare capacity is out there and how quickly it can come on stream are untested and far from certain. What is clear, however, is that the oil market is far less robust than it was before the downturn. Compared with five years ago, Opec’s effective spare capacity is down some 1 million barrels per day, PIW estimates. PIW calculates that effective global spare capacity has shrunk 17% since 2013 to 3.55 million barrels per day, but even this risks presenting too rosy a scene. Less than one-third of that capacity fits the International Energy Agency’s (IEA’s) technical definition of spare capacity — namely, output that can be turned on within one month. What spare capacity does exist remains highly concentrated, with roughly 70% of the cushion residing in just one country: Saudi Arabia (see table). Although the kingdom has long been the world’s key purveyor of spare capacity, Riyadh is not keen to bear too much of the burden given that surging to full capacity quickly could damage its reservoirs. Reaching its full 12.5 million b/d capacity would likely take more than a year to achieve, and it is only with the expansions of its Marjan, Berri and Zuluf fields that Riyadh is likely to feel comfortable doing so (PIW May28’18). Those expansions will not be completed until 2022-23. The spread of spare capacity is more balanced under the IEA’s month-long definition, with Saudi Arabia able to bring on some 400,000 b/d, and Kuwait, the United Arab Emirates and Russia contributing roughly 300,000 b/d apiece. If new members Gabon and Equatorial Guinea are removed, Opec’s group productive capacity has fallen some 800,000 b/d over the past five years, whereas global oil demand has risen by some 10 million b/d.

Saudi-Kuwait neutral zone’s Khafji oil field to be restarted in 2019: Toyo – The Khafji oil field in the Partitioned Neutral Zone shared by SaudiArabia and Kuwait is being prepared to restart production in 2019, Japan’sToyo Engineering said Monday. Toyo has agreed to a third renewal of its general engineering servicesagreement, originally signed in 2002, with Al-Khafji Joint Operations,operator of the Khafji and Hout oil fields located in the neutral zone, itsaid. KJO is owned 50:50 by Aramco Gulf Operations Co. and Kuwait Gulf Oil Co. Under the GESA, which will remain valid until 2023, Toyo said it willsupport KJO on the project planning feasibility study, FEED and technicalsupport for operations of the oil fields. “Maximum oil production rate of the fields is 350,000 b/d,” Toyo said.”Because of oil price recovery, KJO starts the preparation work tore-produce the oil from the fields from 2019,” it added. Kuwait oil minister Bakheet al-Rashidi told the Kuwaiti National Assemblyon June 26 that production had been stopped in the offshore Khafji andonshore Wafra fields for “technical” reasons, and would restart as soon as anagreement with Saudi Arabia was reached. “We are working with the Saudi side to address these technical reasonsand soon we will return to production,” Rashidi was quoted as saying by theKuwait News Agency. Operator Saudi Aramco unilaterally shut production from the 300,000 b/dKhafji field in October 2014, citing new government emission standards for gasflaring. The onshore Wafra field, operated by KGOC and Saudi Arabian Chevron,stopped pumping in May 2015. Sources in Kuwait, however, told S&P Global Platts earlier thatfacilities at both fields have been mothballed, so restarts at the fieldscould take months.

Russian oil output up by 100,000 bpd in June as production curbs eased (Reuters) – Russian average monthly oil output exceeded 11 million barrels per day (bpd) in June for the first time since April 2017 as leading global oil producers started to ease output curbs, Energy Ministry data showed on Monday. Production rose to 11.06 million bpd in June from 10.97 million bpd in May, up around 100,000 bpd. In tonnes, Russian oil output was 45.276 million versus 46.377 million in May. The Organization of the Petroleum Exporting Countries and some other leading global oil producers led by Russia agreed last month to return to 100 percent compliance with previously agreed oil output cuts, after months of underproduction by some OPEC countries. Russia has pledged to restore output by 200,000 bpd in the second half of the year. The country’s largest oil producer Rosneft led the output increase, ratcheting up extraction by 1.6 percent last month to 3.89 million bpd, the data showed. The energy ministry’s data does not include some of Rosneft’s joint ventures. Top oil exporter Saudi Arabia also boosted supply to 10.70 million barrels per day in June, close to a record high. The deal, which has been in place since early 2017, was aimed at smoothing out bloated global oil stockpiles and supporting oil price. Initially, Russia said it would cut its production by 300,000 bpd from a record-high level of 11.247 million bpd reached in October 2016, the baseline for the current global deal which expires by the end of the year. For the first half of the year, Russian oil output declined by 0.4 percent to 271.1 million tonnes year-on-year.

Russia Takes Outsize Role in Boosting Oil Supply – WSJ – Russian oil companies are priming the pumps to significantly boost crude output this summer, taking on an unusually important role in a global effort to keep prices in check. Alongside Saudi Arabia, Russia is one of just a few countries that can quickly ramp up production, a capability that could help a group of big producers – who agreed in late June to boost output – as they try to cool a sizzling global oil market. About 18 months after the Saudi-led Organization of the Petroleum Exporting Countries began limiting supply amid lower prices, the group has the opposite problem. Stored inventories of crude have fallen, demand is strong and supply has been disrupted in Iran, Venezuela and Libya. That has all conspired to send prices sharply higher. .U.S. crude hit 3½-year highs last week. On Saturday, President Donald Trump called on Saudi Arabia to boost production to help meet the world’s needs. Russia joined last month with OPEC in agreeing to open the taps, and was already inching its output upward. It produced 10.97 million barrels a day in May, according to the Russian energy ministry, about 60,000 barrels a day above the level that it agreed to in 2016, when it joined OPEC in the deal to reduce supply to boost prices. OPEC and 10 other oil producers agreed on June 22 to boost output by one million barrels a day, most of which analysts expect will come from Saudi Arabia and Russia. The countries have yet to decide how the quotas will be distributed. Russian Energy Minister Alexander Novak has said the country hopes to expand output by 200,000 barrels a day, clawing back two-thirds of what it initially agreed to cut back in 2016. Estimates of what it might be able to deliver on top of that vary. Goldman Sachs forecasts Russia’s overall spare capacity – essentially idle fields that can be turned on quickly – at about 500,000 barrels a day. The big question is how quickly Russia can get that to world markets. In Saudi Arabia, a single, state-run company pumps all the oil, allowing it to be more nimble in crises. Not so in Russia, where the industry is fragmented among state and private firms.

The New Oil Cartel Threatening OPEC — When reports emerged that India and China are in talks about forming an oil buyers’ club, OPEC was probably too busy with its upcoming June 22 meeting to concern itself with that dangerous alliance. Now, it may be time for it to start worrying.“The timing is right. The boom in U.S. oil and gas production gives us greater leverage against OPEC,” the Times of India quoted an Indian official as saying last month after the formal start of said talks. The two countries, after all, account for a combined 17 percent of global oil consumption and they are the ones that would be the hardest hit if prices rise as a result of OPEC’s actions.What’s more, they might not be alone in this attempt to curb OPEC’s clout on the global oil market. According to Bloomberg’s Carl Pope, Europe and Japan, previously reluctant to take part in any anti-OPEC projects, may now join in. The reason they are likely to join in is that unlike in previous oil price cycles, now there are alternatives to fossil fuels. Electrification is where OPEC may have to face off with a future oil buyers’ cartel. India, China, and Europe are all very big on EV adoption. Japan is a leader in battery manufacturing.If they set their minds to it, these four players could upend the oil market and effectively cripple OPEC. A recent surveysuggested that as many as 90 percent of Indian drivers were willing to switch to EVs if the government built the necessary charging infrastructure, reduced road taxes, and increased subsidies. Another survey identified price and range as additional roadblocks towards the mass adoption of EVs in India. Because of these challenges, New Delhi recently amended its ambitious goal of having an all-EV fleet on the roads of the country by 2030 to having 30 percent of the fleet electric. China, for its part, is the undisputed leader in global EV adoption: the country accounted for more than 50 percent of global EV sales last year in case you were thinking, “Wait, wasn’t that Norway?” However, this was in large part made possible by generous government subsidies for EV manufacturing. These subsidies are due to be wound downto 0 by 2020, and carmakers are already beginning to brace for a future without the support of the state. It’s safe to say it remains uncertain if the EV boom will continue after 2020.

Crude oil is sizzling; WTI price may hit $78 in the short term – Crude oil is turning into a hot commodity as prices are soaring on falling inventories and the Trump administration’s warning to companies to cease buying Iranian oil. Oil prices traded lower in the first half of June, which was followed by huge gains in the second half. This month was a period of erratic global politics that injected a considerable amount of volatility and the stage is set for further geopolitical confrontation. Last month, OPEC oil ministers reached a deal to raise production quotas to add 600,000 – 800,000 barrels a day, effectively returning a third of the barrels that have been withheld since January 2017. OPEC ministers have agreed to a nominal production increase of a million barrels a day to be divided between cartel members and non-OPEC partners, including Russia, which together cut production last year by about 1.8 million barrels a day. That decrease eliminated inventories in developed countries by about 340 million barrels and returned total inventories to around their five-year average. The Saudis appear to have emerged as the winners from last week’s meeting of OPEC, and the subsequent talks between OPEC and its allies in the deal to restrict output. The outcome of meetings seems to indicate that crude oil supply should rise by as much as 1 million bpd.

American “Consumers Held Captive” As WTI Crude Tops $75, Gas Prices Highest Since Nov ’14 – For the first time since Nov 2014, WTI Crude futures front-month contract has topped $75. All of which means Trump better get back on the phone and ask for 3mm b/d from the Saudis as Americans are about to face a huge tax rise as gas prices at the pump are high and about to get higher…As RBC analyst Michael Tran writes in a report today, “retail gasoline is pricing the highest in years, but demand remains relatively firm, ” because consumers are “held captive to the type of vehicle owned.”This ensures that gasoline demand is less “price-elastic” than in previous comparable periods, but leaves the disposable income taking a bigger hit. And as OilPrice.com’s Robert Rapier notes, the irony of this huge rally is that it was sparked by the announcement by OPEC that it would increase production.Oil prices had weakened over the past month following a call from President Trump for OPEC to increase production in response to rising oil prices. After rising above $70 per barrel in May, the price of West Texas Intermediate (WTI) had dropped back to $65/barrel leading up to OPEC’s June 22nd meeting.It was widely anticipated that the group would decide to bump output at the meeting. At the meeting’s conclusion, OPEC, in agreement with Russia, announced that it would increase production for the first time since implementing production cuts in November 2016.But WTI rallied by more than 4% following the announcement. Why? Because the market was underwhelmed by OPEC’s decision.

U.S. oil prices slip, but global prices sink as traders fret over potential for higher output –U.S. oil prices slipped on Monday marked a modest decline, finding some support from crude export disruptions in Libya and recent data showing tighter U.S. supplies. Brent prices, however, suffered a sharp loss as traders weighed expectations for higher global output. Crude had seen even sharper losses in early trading, stemming from a weekend tweet from President Donald Trump that talked about a big potential production increase from Saudi Arabia. August West Texas Intermediate crude on the New York Mercantile Exchange fell by 21 cents, or 0.3%, to settle at $73.94 a barrel, after trading as low as $72.51. September Brent dropped $1.93, or 2.4%, to $77.30 a barrel.Last week’s surge to fresh 3 1/2-year highs for the U.S. benchmark, which contributed to strong monthly, quarterly and first-half 2018 gains, was somewhat disconcerting, said Barnabas Gan, an economist at Overseas-Chinese Bank. He added that the language in Trump’s weekend tweet – which suggested that Saudi Arabia may increase output by 2 million barrels a day – left scope for wide interpretation. Donald J. Trump @realDonaldTrump: Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to high! He has agreed! A senior Saudi Arabia official told The Wall Street Journal on Saturday that no specific promise had been made over production, but rather assurances were given that the country had the capacity to meet demand. A White House statement released that same evening backed off that tweet from Trump, according to reports. It said King Salman of Saudi Arabia had told the president that his country would increase oil production “maybe up to 2,000,000 barrels.” Saudi Arabia, OPEC’s swing producer, and Russia reached an agreement at a closely watched Vienna meeting last weekend to raise output less aggressively than had been anticipated.

Libya Stops Pumping Oil – Libya’s National Oil Corporation has declared force majeure on crude oil loadings from two oil terminals, which effectively removed 850,000 bpd from the country’s production, Libyan media report. “Despite our warning of the consequences and attempts to reason with the LNA General Command, two legitimate allocations were blocked from loading at Hariga and Zueitina this weekend. The storage tanks are full and production will now go offline,” NOC’s chairman Mustafa Sanalla said.Hariga and Zueitina, like the rest of the terminals in the Oil Crescent, are controlled by the Libyan National Army, which handed control over them to the Benghazi-based NOC. Both are affiliated with the eastern government, which is not recognized by the UN.On Saturday, the Benghazi-based NOC refused two loadings, one at Zuetina and one at Hariga, claiming the tankers waiting to load had not asked for its approval, which was now mandatory.The LNA has controlled the Oil Crescent ports since 2016, but last month its grip on them was challenged by other groups led by a Petroleum Facilities Guard commander who is wanted by the Tripoli authorities for the two-year blockade of the ports. Yet unlike in 2016, when it handed the ports to the Tripoli-based NOC, the LNA now passed control of the facilities to the Benghazi NOC, signaling that the divide in Libya between East and West is deepening instead of closing.

OPEC Losing Control After Libya Outages – Oil prices surged in early trading on Tuesday as the supply outages in Libya began to take center stage, but Saudi Arabia and Russia quickly moved to calm markets. The loss of 850,000 bpd nearly offsets all of what OPEC+ plans on adding to the market, although it remains to be seen how high Saudi Arabia plans on going unilaterally. For now, the oil market is looking tighter by the day, and Brent is within striking distance of $80 per barrel.. Saudi Arabia ramped up production in June ahead of the OPEC+ meeting, pushing the group’s overall output to 32.32 million barrels per day (mb/d), according to Reuters, an increase of 320,000 bpd from May. That puts OPEC’s production level at its highest point since January 2018. The increase came from a massive increase in production from Saudi Arabia, which pushed output close to a record high at 10.70 mb/d. The enormous increase of from May levels from Saudi Arabia was offset by outages in Libya and declines in Venezuela. “We are entering the second half of the year with a huge amount of uncertainty surrounding the supply side of the equation,” Tamas Varga of oil broker PVM, told Reuters. “Depending on your belief you could just as easily bet on $100 as $60 by the end of the year.” Over the weekend President Trump tweeted that OPEC would add 2 mb/d of new supply, a statement that confused the oil market. The White House had to walk back that comment, issuing a statement that said that the Saudi King merely told Trump that there was 2 mb/d of spare capacity that could be called upon if needed. Nevertheless, Trump’s tweet led to a dip in oil prices on Monday as traders tried to figure out if Saudi Arabia planned on adding more oil than expected. In early trading on Tuesday, however, it seemed that expectations of a wave of supply subsided, with traders refocusing on the outages in Libya and Canada. WTI and Brent jumped more than 1 percent in early trading before falling back again.

Oil settles higher in volatile pre-holiday session (Reuters) – Crude prices ended slightly higher on Tuesday after a volatile session in which the U.S. benchmark passed $75 a barrel for the first time in more than three years before turning negative and later recouping its losses. Oil rallied early in the session on supply concerns, then slid as traders booked profits ahead of the July Fourth holiday in the United States, and bet that global supply shortages would not persist as long as expected. Crude pared its losses late in the session, turning positive on market sentiment that supply disruptions would not resolve faster than previously expected. U.S. light crude settled up 20 cents at $74.14 a barrel, rebounding from a session low of $72.73 a barrel. In early trade, the contract rose to $75.27, a 3-1/2-year high. Brent crude was up 46 cents at $77.76 a barrel, after trading as low as $76.67 and as high as $78.85. In post-settlement trade, prices extended gains after the American Petroleum Institute said crude stockpiles had fallen more than expected last week. Stockpile data from the U.S. Energy Information Administration is expected on Thursday after a delay due to the July 4 holiday. The early gains came after Iran appeared to threaten to disrupt oil shipments from the Middle East Gulf if Washington pressed ahead with sanctions. U.S. crude rose above $75 a barrel for the first time since 2014. Prices retreated as some thought talk of supply disruptions might be overblown, said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut. He also said traders could be moving to liquidate bullish positions. Pressure to liquidate may have accelerated ahead of the U.S. holiday on Wednesday, said Tariq Zahir, managing member at Tyche Capital in New York. Traders said supply disruptions could be short-lived as OPEC and allied producers ramp up output.

Oil prices edge up as U.S. supply tightens, Iran sanctions loom – (Reuters) – Brent oil rose on Wednesday, driven higher by a threat from an Iranian commander and a drop in U.S. crude inventories for the second week in a row. The price rose above $78 a barrel after an Iranian Revolutionary Guards commander said he was ready to prevent regional crude exports if Iranian oil sales were banned by the United States. The most-active Brent LCOc1 futures contract for September delivery settled up 48 cents at $78.24 per barrel. U.S. crude futures CLc1 were up 19 cents at $74.33 a barrel, within sight of Tuesday’s 3-1/2-year high above $75 a barrel. The U.S. market will not have a settlement price due to the U.S. Independence Day holiday. Iranian President Hassan Rouhani appeared on Tuesday to threaten to disrupt oil shipments from neighbouring states if Washington continued to press all countries to stop buying Iranian oil. Looming U.S. sanctions on Iranian crude exports, force majeure in Libya and unplanned pipeline outages in Nigeria have been clouding the supply outlook despite rising output by the Organisation of the Petroleum Exporting Countries. “In an ideal world an increase in global or regional oil production would have downward pressure on prices. These are, however, no normal times as supply outages are almost weekly occurrences,” Crude inventories fell by 4.5 million barrels in the week to June 29 to 416.9 million, compared with analysts’ expectations for a decrease of 3.5 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 2.6 million barrels, API said. Crude stockpiles at oil storage facilities in Cushing have dropped after an outage at Syncrude Canada’s 360,000 barrels per day (bpd) oil sands facility near Fort McMurray, Alberta.

Trump to OPEC: ‘Reduce pricing now!’ (Reuters) – U.S. President Donald Trump again accused the Organization of the Petroleum Exporting Countries of driving gasoline prices higher on Wednesday and urged the oil producer group to do more. “The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two way street. REDUCE PRICING NOW!” Trump wrote on Twitter. The Republican president has lashed out at OPEC in recent weeks. Rising gasoline prices could create a political headache for Trump before November mid-term congressional elections by offsetting Republican claims that his tax cuts and rollbacks of federal regulations have helped boost the U.S. economy. In a tweet on Saturday, Trump said Saudi Arabia had agreed to increase oil output by up to 2 million barrels, an assertion that the White House rowed back on in a subsequent statement. The leader of Saudi Arabia, OPEC’s biggest member, has assured Trump that the kingdom can raise oil production if needed and that the country has 2 million barrels per day of spare capacity that could be deployed to help cool oil prices to compensate for falling output in Venezuela and Iran. Trump has been complaining about OPEC at the same time that Washington is piling pressure on its European allies to stop buying Iranian oil. Iranian OPEC Governor Hossein Kazempour Ardebili said on Thursday that Trump had raised oil prices through his tweets. “Your tweets have increased the prices by at least $10. Please stop this method,” the Iranian oil ministry’s news agency, SHANA, quoted Kazempour as saying. Kazempour said Trump was trying to intensify tensions between Iran and Saudi Arabia. He also called on the United States to join world powers in a meeting with Iran in Vienna on Friday. Foreign ministers from the five remaining signatories of a nuclear deal between Tehran and world powers will meet Iranian officials in the Austrian capital to discuss how to keep the accord alive after the U.S. withdrawal from the pact. Iran has threatened to block oil exports through a key Gulf waterway in retaliation against any hostile U.S. action.

Iran’s OPEC boss says Trump’s tweets have added $10 to oil prices (Reuters) – U.S. President Donald Trump, who recently called on OPEC producers to help reduce oil prices, has raised prices through his tweets, Iranian OPEC Governor Hossein Kazempour Ardebili was quoted as saying by news agency SHANA on Thursday. “Your tweets have increased the prices by at least $10. Please stop this method,” the oil ministry news agency quoted Kazempour Ardebili as saying. Kazempour Ardebili said Trump was trying to intensify tensions between Iran and Saudi Arabia and he called on the United States to join world powers in a meeting with Iran in Vienna on Friday. Foreign ministers from the five remaining signatories of a nuclear deal between Tehran and world powers will meet Iranian officials in Vienna to discuss how to keep the accord alive after the U.S. withdrawal from the pact.

Russia Gets $63.5 Billion Windfall From OPEC Deal – Russia’s budget has received more than US$63.5 billion (4 trillion Russian rubles) in additional revenues thanks to the production cut deal between OPEC and non-OPEC nations led by Russia that boosted oil prices, Kirill Dmitriev, chief executive of the Russian Direct Investment Fund (RDIF), said in an interview with Russian television channel NTV. In May, the Russian finance ministry said that due to the oil price rally, Russia expects its oil and gas revenues to jump fivefold compared to the expected revenues set in its 2018 budget. Oil and gas exports account for around 40 percent of Russia’s federal budget revenues.

OPEC Production Jumps In June As Saudis Near Production Record – OPEC’s oil production in June increased by 320,000 bpd from May to stand at 32.32 million bpd, as the cartel’s biggest producer Saudi Arabia produced close-to-record volumes, according to a monthly Reuters survey tracking oil supply to the market. Saudi Arabia’s oil production in June surged by 700,000 bpd to 10.70 million bpd, very close to its highest-ever production of 10.72 million bpd from November 2016, a Reuters survey showed, in a clear sign that OPEC’s leader had started boosting production before the June 22 meeting and is making up for supply drops elsewhere within the cartel. Saudi Arabia interprets the vague OPEC statement from the June meeting to ease compliance rates as implying that there will be indirectly a reallocation of quotas within the cartel. The main Saudi rival in the Middle East, Iran, strongly disagrees that OPEC members should be allowed to make up for production losses in other nations, and publicly criticized Saudi Arabia for boosting production. According to the Reuters survey, the Saudi allies in the Gulf – the UAE and Kuwait – maintained steady production in June compared to May, so they have yet to increase production following the Saudi lead.

WTI/RBOB Slammed On Surprise Crude Build – API reported a significant crude draw yesterday and after last week’s record US exports and biggest crude draw in two years, DOE reported a surprising crude build of 1.245mm barrels and sent WTI/RBOB tumbling. DOE:

• Crude +1.245mm (-5mm exp)
• Cushing -2.113mm (-2mm exp)
• Gasoline -1.505mm (-750k exp)
• Distillate +134k

Following last week’s massive crude draw (biggest in 2 years) and API’s 4.5mm draw, DOE reported “The acute shortage at Cushing is creating an additional headache,” Energy Aspects analysts say in note. “The priority for the physical market right now is to refill Cushing in August as we will reach tank bottoms at the hub in July”U.S. Weekly Canada Crude Imports at highest on record.All eyes were on US crude production once again to see if the Permian pipeline bottlenecks were still holding back output…and for the 3rd week in a row production was unchanged.

Doubts Grow Aramco IPO Will Ever Happen – WSJ — Preparations for the public listing of Saudi Arabia’s state oil company, a centerpiece of the government’s plan to open its economy, have stalled, leaving government officials and people close to the process doubting that it will go forward at all. The initial public offering of Saudi Arabian Oil Co., better known as Aramco, was meant to be the cornerstone of the kingdom’s plan to be less reliant on oil. It would create the largest public company in the history of capital markets, an opportunity coveted by Wall Street’s biggest names.Yet doubts have crystallized in recent months, after two years of work to prepare Aramco for its debut. Saudi officials and people close to the process say the company and the country simply aren’t ready for an IPO that could raise $100 billion but also bring unprecedented scrutiny to the kingdom’s crown jewel. Representatives for the Saudi energy ministry and the government didn’t respond to questions. First proposed by Saudi Crown Prince Mohammed bin Salman in January 2016, the IPO was originally meant to be done last year. It has been pushed back several times and was most recently slated for next year.Until recently, despite the delays, work on the IPO had appeared to be progressing, if slowly. Aramco executives and outside advisers have become more vocal in recent months about telling Prince Mohammed about the problems with listing the company, government officials said.Saudi officials say they have determined that listing on a large stock exchange in New York, London or Hong Kong would carry too many legal risks, exposing Aramco to shareholder lawsuits, for example.

Oil Drops As WSJ Reports Aramco IPO “Almost Certainly Won’t Happen” Last we heard from inside the kingdom, the Aramco IPO had been put on hold, with inside sources telling the FT that plans for the IPO had been temporarily shelved, and that the process for selecting a venue for listing the shares had been put off until at least 2019. Then there were rumors about a private sale directly to some of the world’s sovereign wealth funds – which would cutting out the investment banker middlemen who’ve been salivating at the prospect of winning a piece of the world’s largest IPO. But six months into 2018, with oil prices at their highest level in three-and-a-half years and President Trump pushing Saudi Arabia and the rest of OPEC to ramp up production to help quell rising crude prices, the Wall Street Journal has dropped what looks like a bombshell on the oil market. The Aramco IPO, which would’ve likely been the biggest offering in history given the company’s valuation, is almost certainly not going to happen.According to the paper’s inside sources, the death of the IPO has been all but officially announced. Furthermore, WSJ reported that the IPO would bring “unprecedented scrutiny” to the Kingdom’s “Crown Jewel”, according to Saudi officials. “Everyone is almost certain it is not going to happen,” said a senior executive at Aramco, speaking of the IPO. Oil prices are sliding as expectations surrounding the offering had been one of the factors supporting crude prices.

Oil near 3-1/2-year high despite Trump demand that OPEC cut prices – Oil traded near its highest in 3-1/2 years on Thursday, boosted by potential disruptions to flows from Iran and the Middle East despite a fresh demand from U.S. President Donald Trump that OPEC cut prices. Continue Reading Below Brent crude futures were at $78.12 a barrel at 1050 GMT, down 12 cents. U.S. crude futures were up 32 cents at $74.46, within sight of Tuesday’s 3-1/2-year high above $75. “If Trump continues to believe that OPEC are not doing enough, we would not rule out an SPR (Strategic Petroleum Reserve) release from the U.S., or possibly even export restrictions on petroleum products,” ING said in a note. “However with plenty of uncertainty over Iranian supply, and the Syncrude outage in Canada, the market is likely to remain fairly well supported in the near term.” Trump again on Wednesday accused the Organization of the Petroleum Exporting Countries of driving up fuel prices.”The OPEC Monopoly must remember that gas prices are up & they are doing little to help,” Trump wrote on his personal Twitter account. “If anything, they are driving prices higher as the United States defends many of their members for very little $'s.” “This must be a two way street,” he wrote, adding in block capitals, “REDUCE PRICING NOW!”

Oil slips as U.S. crude stockpiles show surprise build (Reuters) – Oil fell on Thursday after U.S. government data showed an unexpected build in crude oil stockpiles. U.S. crude futures fell $1.20 to settle at $72.94 a barrel, retreating from Tuesday’s 3-1/2-year high of over $75. Brent crude futures lost 85 cents to settle at $77.39 a barrel. U.S. crude stockpiles rose 1.3 million barrels last week, according to U.S. Energy Information Administration data. Analysts had expected a 3.5 million-barrel draw. [EIA/S] “Because it’s driving season, you expect a lot of crude to go through refineries right now – so that’s why we were looking for a draw,” On Thursday, The Wall Street Journal reported that public listing preparations of state-run Saudi Aramco have stalled. That may reduce the pressure on Saudi Arabia to keep oil prices high, Saudi Arabia has wanted to sell shares in Aramco to bring in foreign investment to diversify its economy, but legal concerns about listing in places like London or New York have presented complications. Inventories at Cushing, Oklahoma, the delivery point for U.S. crude futures, fell to their lowest level since December 2014. Flows into Cushing dropped following an outage at the 360,000 barrel per day (bpd) Syncrude facility in Alberta, which is expected to persist through July. “With those continued drawdowns at Cushing, we were approaching a situation where you could soon start to consider us nearing a shortage,” Kilduff said. The inventory report also showed an increase in imports, which “provided some relief…and showed that even with the Syncrude situation, all is not lost,” Kilduff said. Oil prices have been rocked by recent comments from President Donald Trump. On Wednesday, he accused the Organization of the Petroleum Exporting Countries of driving up fuel prices. OPEC, together with a group of non-OPEC producers led by Russia, reduced output in 2017 to prop up the market. Last month, the group agreed to lift production by about 1 million bpd to offset losses from Venezuela and Iran. Prices have risen as a result of Washington’s plans to reimpose sanctions against Iran, OPEC’s No. 3 producer, analysts said. On Wednesday, an Iranian Revolutionary Guards commander said Tehran might block oil shipments through the Strait of Hormuz. A blockade of the strait, through which roughly 30 percent of all seaborne oil travels, would have “dramatic consequences for global oil supply and an impact on prices that is almost impossible to put into figures,” Commerzbank said in a note.

Oil Falls Back On Saudi Supply Surge – Oil prices dipped on Thursday and in early trading on Friday following a disappointing report from the EIA, which showed an unexpected build in crude inventories. Meanwhile, the U.S.-China trade war began in earnest on Friday, raising concerns about a slowdown in demand. Finally, an increase in oil production from Saudi Arabia dragged down prices. U.S. tariffs on $34 billion worth of Chinese goods began on Friday, with retaliatory tariffs from China immediately implemented. China said the U.S. has now initiated the largest trade war in history. The escalation of the trade war is showing no signs of reaching a resolution, and it comes at a time when global trade is slowing down anyway, raising threats to global economic growth. And as China moves to put tariffs on U.S. crude, Chinese refiners are looking elsewhere for oil imports. China is expected to import around 400,000 bpd from the U.S. in July. Meanwhile, the EU is compiling a list of American goods for new tariffs. New reports surfaced recently suggesting that Saudi Arabia ramped up production in June, but the latest from Reuters pegs the figure at 10.5 million barrels per day, or an increase of 500,000 bpd from a month earlier. Saudi Arabia’s all-time record high stands at about 10.7 mb/d, and by all indications, Riyadh is planning to breach that threshold this month. President Trump issued several demands via twitter this week for more production, and the Saudis look set to comply. A dearth of investment in new sources of oil production could lead to a price spike, and investors who demanded capital discipline from oil companies may soon regret that position. “Investors who had egged on management teams to reign in capex and return cash will lament the underinvestment in the industry,” Sanford C. Bernstein & Co. wrote in a note. “Any shortfall in supply will result in a super-spike in prices, potentially much larger than the $150 a barrel spike witnessed in 2008.”

US Oil Rig Count Inches Higher As WTI Pops – Baker Hughes reported an increase in the number of active oil rigs in the United States today. The overall rig count increased by 5 rigs, according to the report, with all of that increase coming from oil rigs, the number of gas rigs stayed the same.The oil and gas rig count now stands at 1,052 – up 100 from this time last year.Canada, for its part, gained 10 oil rigs for the week – after last week’s gain of 12 oil and gas rigs. After multiple weeks of significant gains, Canada’s oil and gas rig count is now up 7 year over year.Oil benchmarks went in different directions again on Friday afternoon, with WTI trading up and Brent trading down as fears of the escalating U.S.-Chinese trade war and increased production by Saudi Arabia and Russia pulled against concerns over supply disruptions from Venezuela and Libya as well as the looming sanctions on Iran. Saudi Arabia had earlier reported to OPEC that they had pumped 10.488 million bpd in June, up by 458,000 bpd from their self-reported figure for May, OPEC sources told Reuters. At 08:23 a.m. EDT today, WTI Crude was down 0.78 percent at $72.37, and Brent Crude traded down 1.23 percent at $76.44. At 11:39am EDT, the WTI benchmark had rallied and was trading up 0.88% (+$0.64) to $73.58 – although still down week over week, while Brent traded down 0.47% (-$0.36) to $77.03 at that time – also down week over week.The steady upward climb that U.S. oil production has been on throughout 2018 appears to have leveled off at 10.900 million bpd, where it has hovered for four weeks now. At 6 minutes after the hour, WTI was trading up 1.14% at $73.77, with Brent trading down 0.30% at $77.16.

Crude Oil Prices Settle Higher But Can’t Avoid Weekly Loss – – WTI Crude Oil prices settled higher Friday, despite data showing a ramp up in the number of U.S. oil rigs, signalling a potential expansion in domestic crude output.On the New York Mercantile Exchange crude futures for August delivery rose 1.2% to settle at $73.80 a barrel, while on London’s Intercontinental Exchange, Brent fell 23 cents to trade at $77.16 a barrel.Oilfield services firm Baker Hughes reported on Friday that the number of U.S. oil drilling rigs in operation rose by 5 to 863 in the week to June 29. That comes on the back of two-straight weeks of falling rig counts. Crude oil prices were supported, however, by ongoing bets on a shortage in global crude supplies amid rising oil demand, the potential for a larger drop in Iranian crude exports – amid looming U.S. sanctions – and ongoing challenges in Venezuela’s energy industry.Expectations for a shortage in global crude supplies come against the backdrop of rising Russian and Saudi output.The Saudis reportedly informed OPEC that they raised output by 458,000 barrels a day (bpd) in June, from the prior month, Reuters reported, citing OPEC.A monthly S&P Global Platts OPEC survey, meanwhile, showed Saudi Arabia pumped 10.39 million bpd in June, up from 10.01 million bpd in May – the highest Saudi production level since December 2016.Crude oil prices posted a weekly loss after suffering a hefty sell-off Thursday, when U.S. crude supplies unexpected rose as imports surged. Inventories of U.S. crude rose by 1.245 million barrels for the week ended June 30, confounding expectations for a draw of 5.20 million barrels, according to data from the Energy Information Administration (EIA).

Sanctions On Iran May Send Oil Prices Above $90 Next Year – According to Bank of America Merrill Lynch, oil prices will hit $90 a barrel by the second quarter of 2019, as Iranian oil barrels are removed from the market and other supply disruption risks threaten the tightening oil market.The United States signaled this week that it would look to take as much Iranian oil as possible out of the market with the renewed sanctions on Tehran.Although Saudi Arabia and Russia had OPEC and allies pledge last week to ease compliance rates, in other words to boost production by an unspecified number, production increases will make the global spare capacity thinner at a time of low inventories, setting the stage for higher oil prices in case of additional supply disruptions, analysts believe.“We are in a very attractive oil price environment and our house view is that oil will hit $90 by the end of the second quarter of next year,” Hootan Yazhari, head of frontier markets equity research at Bank of America Merrill Lynch, told CNBC.“We are moving into an environment where supply disruptions are visible all over the world… and of course President Trump has been pretty active in trying to isolate Iran and getting U.S. allies not to purchase oil from Iran,” Yazhari noted.“With inventories still declining and spare capacity uncomfortably low, there is very little cushion for any supply disruption caused by rising geopolitical risks,” ANZ bank told Reuters. Even before OPEC’s much-talked-about meeting last week, the International Energy Agency (IEA) expected – like many analysts – that there would be some sort of production increase. But even if the Iran and Venezuela supply gap is to be plugged, “the market will be finely balanced next year, and vulnerable to prices rising higher in the event of further disruption,” the Paris-based agency said in its Oil Market Report in mid-June.

Iran Accuses US Of Docking Chemical Weapons-Laden Ship In Persian Gulf – Multiple Russian and Middle East news sources are reporting new accusations by the Iranian military that that a US ship carrying chemical weapons has recently anchored in the Persian Gulf and in engaged in a “dangerous plot”, though not naming the particular “Gulf state” territorial waters at which the ship docked. The accusation comes just as a major seven week US military exercise, Operation Nautical Horizon, has concluded in the Persian Gulf which involved the same military transport ship that decommissioned Syria’s declared chemical weapons stockpiles. Iran’s Press TV reported that senior Iranian military spokesman Brigadier General Abolfazl Shekarchi said the US Navy’s MV Cape Ray vessel had docked at the coast of one of the Persian Gulf Arab countries after recently being escorted into the region by an American warship, and implied further that chemicals carried by the ship could be transferred to US-backed groups in Syria.“After suffering consecutive blows by the resistance front, the Americans have now resorted to dangerous ways to continue their presence in Iraq and Syria,” Shekarchi stated, according to Iranian state-run media. Press TV further cited the general as saying, “The news proves that chemical attacks in Iraq and Syria have been engineered and led by the Americans,” and that, “The Western countries have used the alleged gas attacks in Syria as a pretext to target military positions inside the Arab country.” He said:

Iran Threatens To Close Strait of Hormuz – – Iranian president Rouhani stated on Tuesday in Bern, Switzerland that his country could block the Strait of Hormuz for all Arab shipping traffic if Washington fully implements its zero oil export targets for Iran in the coming months.Rouhani, who is currently on a lobbying mission in Europe in an effort to salvage the JCPOA deal (the Iran nuclear deal) and mitigate U.S. sanctions, seems to be have been pushed by hardliners to increase threats against Iran’s neighbors.Rouhani, considered by European politicians to be a reformist, appears to be showing a hardline streak that is nearer the strategy of the country’s supreme leader, Ayatollah Khamenei. Khamenei has already been pushing for a direct confrontation with the U.S. and the Arab Alliance. Several hours after Rouhani made his statement, Major-General Qassem Soleimani, one of the leaders of the Iranian Revolutionary Guard Corps (IRGC), told the press that the IRGC is fully prepared to implement any action ordered by Rouhani or Khamenei. Soleimani, well-known for his direct involvement in the Syrian civil war and the set up of Iraqi Shi’a militias, has a reputation for taking strong and direct military action if needed. No direct threats were made, but the closure of the Strait of Hormuz, the main thoroughfare of the Arabian/Persian Gulf region, is of strategic importance to all. At present, according to the Energy Information Agency (EIA.gov), more than 17 million bpd of crude oil and products travel through the strait every day. If taking into account that all of Qatar’s LNG exports are also going through it, the importance is clear.

US Vows To Keep Gulf Waterway Open After Iran Threatens Blockade –Iranian President Hassan Rouhani suggested Iran could stop all regional gulf oil exports in retaliation for the US seeking to collapse the nuclear deal, and in response to aggressive new US sanctions. “The Americans have claimed they want to completely stop Iran’s oil exports. They don’t understand the meaning of this statement, because it has no meaning for Iranian oil not to be exported, while the region’s oil is exported,” the state-run website, president.ir, quoted Rouhani as saying. “The Americans say they want to reduce Iranian oil exports to zero… It shows they have not thought about its consequences,” Rouhani said. After the provocative Iranian statements, widely understood as a threat to impose military blockade on the world’s most crucial oil choke point, spokesman for the US military’s Central Command, Captain Bill Urban, told the Associated Press on Wednesday that US sailors and its regional allies “stand ready to ensure the freedom of navigation and the free flow of commerce wherever international law allows”. Washington has issued an ultimatum to countries dealing with Iran: halt all imports of Iranian oil from Nov. 4 or face punitive US economic measures with no exemptions. Rouhani called these threats “crime and aggression” and an act of “self-harm” as the unwavering stance is “against U.S. national interests and the interests of other countries.” He said this while in Vienna attempting to rally European governments to stand against Trump’s policies targeting Tehran. Previous threats by Iranian officials to possibly take the drastic action of blocking the the Strait of Hormuz – though once easily shrugged off as empty talk – are now coming to a head as the elite Islamic Revolutionary Guard Corps (IRGC) has thrown its full weight behind Rouhani’s words, to which the Pentagon responded, issuing its firm response promising to keep the waterway open through military action if need be.

Iraq executes 13 and orders hanging of hundreds more amid fears of Isis resurgence – Iraq has put to death 13 people convicted of terrorism offences hours after the prime minister, Haider al-Abadi, ordered the execution of hundreds of prisoners on death row in retaliation for the killing by Isis of eight members of the security forces.The hangings are aimed at quelling public anger over signs that Isis is re-emerging as a threat after the group showed eight captives, who were badly bruised and looked as if they had been severely beaten, on a video last weekend and said that they would be killed unless Sunni women prisoners were released by the government within three days. The government says that autopsies on the bodies of dead men, six of whom belonged to the logistics department of the paramilitary Hashd al-Shaabi, or Popular Committees, showed that they were shot and killed before this deadline expired. An Iraqi government official, speaking to The Independent just before the discovery of the bodies, said that Isis fighters targeting the main Baghdad-Kirkuk road were based in the rugged Hamrin mountains, a traditional Isis stronghold.Isis suicide bombers based in the Syrian border area are continually trying to reach Baghdad but “so far they have failed”. He added that Iraqi security forces now have good intelligence about Isis plans and personnel after luring back to Iraq five senior Isis leaders it had captured and interrogated. It appears Isis is keen to revert to guerrilla war similar to that which it waged successfully before its explosive expansion when it captured Mosul in 2014, but so far it has had only limited success.

Son Of ISIS Leader Reported Killed In Suicide Attack – – While his father has been declared dead many times, only to miraculously reemerge in defiance of western (and Russian) media reports, Hudhayfah al-Badri, the son of ISIS leader Abu Bakr al-Baghdadi, was recently killed in an “Inghimasi” operation in Homs province while fighting against Russian and Syrian forces, according to the Telegraph, which cited an official ISIS announcement. An “Inghimasi” attack is essentially a suicide mission where ISIS soldiers fight for as long as they can until they are either gunned down, or detonate suicide vests as a last stand.The statement announcing his death was circulated on Telegram, a popular chat app that’s also regularly used for spreading terrorist propaganda.”The son of the Caliph Abu Bakr al-Baghdadi was killed in the “Nasiriyah” at the hotspot location in the state of Homs,” the ISIS statement said. According to Al Arabiya, the term “Nasiriyah” refers to the Alawite sect, of which Syrian leader Bashar al-Assad is a member. Badri is believed to have been born in 2000 to an Iraqi woman named Asmaa Fawzi Mohammed al-Kubaisi, which would make him 18 at the time of his death. In a photograph released by ISIS, he can be seen as a teenager holding an assault rifle, although that image may have been digitally altered. The ISIS statement didn’t say when Badri was killed. Badri was born in the Iraqi City of Samarra before his father became a senior al-Qaeda leader. Al Baghdadi is believed to have at least four other children.

Israel Demolishes Palestinian Bedu Community Near East Jerusalem – Israeli forces on Wednesday demolished a Palestinian Bedouin community near East Jerusalem in the occupied West Bank.“Military bulldozers, backed by Israeli forces, stormed the Abu al-Nawwar Bedouin community at dawn and demolished ten Palestinian homes and livestock barracks,” Daoud Jahaleen, a spokesperson for the community, told Anadolu Agency.He said the community is home to 687 Palestinians, 65% of them are children.In February, Israeli bulldozers razed the only school in the Bedouin community, which is surrounded by two Israeli settlements, Ma’ale Adumim and Kedar.For years, the Israeli government has tried to dismantle the Abu al-Nawwar community to make way for its massive E1 settlement project in East Jerusalem.

Israel Poised For Complete Annexation Of West Bank, UN Warns — Just prior to a United Nations Human Rights Council meeting on the Israeli-Palestinian conflict this week, a UN legal expert has declared that Israel is moving closer to formal annexation of the West Bank. “After years of creeping Israeli de facto annexation of the large swathes of the West Bank through settlement expansion, the creation of closed military zones and other measures, Israel appears to be getting closer to enacting legislation that will formally annex parts of the West Bank,” UN official Michael Lynk said. Lynk’s warning was posted on the web site of the UN Office of the High Commissioner for Human Rights (UNHRC) – the rights monitoring body that both the United States and Israel are boycotting, with the US recently stunning the council by announcing its pullout last month, citing a general anti-Israel bias. The UN statement highlighted Israeli expansion: “This would amount to a profound violation of international law, and the impact of ongoing settlement expansion on human rights must not be ignored,” Lynk continued. “This is my third mission to the region since I assumed the mandate in May 2016, and the reports I received this week have painted the bleakest picture yet of the human rights situation in the Occupied Palestinian Territory,” he said after returning from an information gathering mission to the region. The statement also highlighted restriction on Palestinian movement, night raids and the lack of building approvals, and what the UNHRC has called a creeping de facto annexation of West Bank territory. Lynk will deliver a full and final presentation of his findings before the UN General Assembly 73rd session in October – this as a formal UN investigation into the recent shootings of hundreds of Palestinian protesters in Gaza by Israeli security forces is simultaneously underway, an inquiry which was also condemned by the United States and Israel in a May vote.