Oil, Gas, And Fracking News Reads 21July 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 21 July 2018. Go here for Part 1.

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

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Not dead yet: Home of Brent crude gets new lease of life (Reuters) – Oil giant BP’s Eastern Trough Area Project off the coast of Scotland wasn’t supposed to be viable beyond 2018. But government and industry working together have given ETAP a new lease of life that is being closely watched by countries and companies eyeing other ageing projects around the world. When ETAP was launched 20 years ago today, some experts predicted the UK sector of the North Sea would cease most production by 2030. Government efforts to keep producers in the basin, home to the Brent crude that underpins the price benchmark, gained urgency with the 2014 oil price crash. Cheaper oil also forced the industry to upgrade technology and find more efficiencies. From original plans to stop production at ETAP, BP decided to invest $1 billion in 2015. “One has to take stock of the potential going forward and make an intervention that allows for the right investment to extend life,” Ariel Flores, BP’s North Sea Chief, told Reuters. “We’ve done that on ETAP.” ETAP’s example shows how efforts to extend the production in the North Sea are succeeding, providing lessons for producers in other fields near exhaustion such as those in the Gulf of Mexico and southeast Asia. ETAP produces around 37,000 barrels per day of oil now against as much as 217,000 bpd in 2000. But BP production in the entirety of the North Sea is set to double in 2020 to 200,000 bpd from 2014 as fields such as Clair Ridge west of Shetland islands come on line, Flores said. “There are a number of fields in the central North Sea area waiting for final investment decisions (FIDs). And for some of those, the potential host is ETAP,” Flores said. Long-established oil giants such as BP, Royal Dutch Shell and Total as well as smaller, nimbler North Sea-focused producers such as Enquest and Premier Oil are all finding business opportunities in the area.

Ireland To Move All Its Oil Reserves Out Of The UK As Brexit Nears — The Irish government is expected to agree this week on a plan to move all of the Republic’s oil reserves out of the UK as Ireland steps up its preparations for Brexit, Ireland’s Sunday Independent reported.Under the plan, seen as one of the most significant Brexit decisions for Ireland so far, Ireland will transfer the nearly 200,000 tons of oil out of British refineries and back into Ireland or other EU member states, as the UK is preparing to leave the European Union bloc.According to Sunday Independent, the oil would be moved out of the UK “for national security reasons.”“We pay for storage there so that will have serious implications for UK refineries who have stored our oil for almost two decades,” a senior Irish government source told Sunday Independent.Ireland has 1.5 million tons of oil reserves. Some 500,000 tons of those reserves are stored in other countries, including the UK, the Netherlands, Denmark, and Spain. The remaining 1 million tons are held at ports along Ireland’s coasts.Under the EU’s Oil Stocks Directive, EU countries must keep emergency stocks of crude oil and/or petroleum products equal to at least 90 days of net imports or 61 days of consumption, whichever is higher.According to reports, one of Ireland’s options for moving the oil reserves out of the UK could be physically moving the oil via tankers. An alternative is also being considered – to make trade deals in which the ownership of UK oil in other EU member state is transferred to Ireland, without the need to physically move the oil.While it is studying where to keep its oil reserves after Brexit, Ireland could become the first country in the world to quit fossil fuel investments completely, after the Fossil Fuel Divestment bill was passed by the country’s lower house, the Dflil Éireann, last week.

Why Is Venezuela Still Sending Subsidized Oil To Cuba? — In the past, oil has accounted for 96 percent of Venezuela’s exports and over 40 percent of government revenues. Now, as the nation’s economy continues to crumble amid sanctions, political strife, and low oil prices, Venezuela’s all-important oil production is plummeting. In fact, last month’s production was the lowest in 30 years at 1.5 million barrels a day. In desperation, the struggling administration has even begun to shut downproduction proactively as their terminal storage meets maximum capacity and the government faces major bottlenecks at storage facilities and ports. As oil production and exports drop, the Venezuelan government has even less money to buy essentials like food, medicines, and other basic goods–a well-established crisis growing worse all the time. The International Monetary Fund (IMF) has said that the brutal economic crisis underway in Venezuela is one of the worst in modern history. The nation’s once powerful economy has plummeted 45 percent in the last five years, and the IMF projects that it will shrink 15 percent in 2018 alone. Out-of-control inflation rates will reach 13,800 percent. However, in the middle of the chaos — a collapsing regime, widespread hunger, medical shortages — there is one holdover from the socialist platform that autocratic President Nicolas Maduro has refused to lapse on. Despite the crisis on his own soil, Maduro continues to grant generous oil subsidies to Cuba. The small island nation, not without its own economic issues, has been dependent on cheap Venezuelan oil since the 1990s. After the fall of the Soviet Union, comrade Cuba was in economic shambles. It was at this point that they turned to Venezuela reduced-rate crude oil, in exchange for sending skilled laborers across the Caribbean. Now, as Venezuela sinks deeper and deeper into an extreme economic depression, few could have predicted that they would still be making good on that decade-old agreement with Cuba–even the Cubans themselves have been scrambling for new sources of cheap crude.

Big petroleum projects in Argentina face tiny challenge: a lizard (AFP) – A tiny but critically endangered lizard found in Argentina’s extensive Vaca Muerta petroleum field could pose a major challenge to companies planning multimillion-dollar investments in the area. The lizard, whose scientific name is Liolaemus cuyumhue, was discovered in an area known as Bajo de Anelo, in the western province of Neuquen. “We have classified this lizard as critically endangered,” warned Luciano Avila, a herpetologist, or reptile specialist. The species was identified just a year ago in Bajo de Anelo, an area of tectonic subsidence — sinking of the Earth’s crust — within the Vaca Muerta field. The lizard is “one step away from being in danger of extinction if no measures are taken to protect its environment,” The tiny tan lizard lives in dunes and can bury itself and move under the surface “as if swimming through the sand,” Avila said. It survives on insects. But its habitat, he said, is being disturbed by oil companies’ fracking activities — the hydraulic fracturing of shale deposits to extract oil or gas. Petroleum companies have big plans for the area, saying they want to invest more than $3 billion over the next 20 years. But to Avila, Bajo de Anelo is a “spectacular area” and a hotspot of biodiversity, with “many lizards that are unique to these environments.” He would like to see more research done on the lizards and their environment, with the government establishing permanent safe areas for their continued survival.

Angola data: Crude oil exports down further in May – Angola’s oil exports fell further in May, as the African oil producer struggles to arrest declines at some of its ageing deepwater oil fields, finance ministry data showed Tuesday. But there could be a recovery in the country’s oil production with the start up of Total’s 230,000 b/d Kaombo field beginning production next month. Angola exported 1,425,269 b/d of crude oil in May from 1,534,750 b/d in April, and down 13% from the 2017 average export volume of 1,632,766 b/d, according to ministry data. The country exported a total of 44,183,339 barrels of crude in May at an average price of $70.71/b, compared with 46,042,507 barrels at an average price of $65.50/b in April, the ministry added. Export volumes last year fell 6% from 2016 levels of 1,730,070 b/d after exports in 2015 rose to a five-year high of 1,767,410 b/d. Trading sources expect exports in June to fall further as technical problems persist at some its fields. Last week, the Angolan oil minister reported to OPEC that output in June averaged 1.45 million b/d in June compared to 1.49 million b/d the previous month. The fall in exports in the past year reflects a similar trend in Angolan oil production, owing to technical and operational problems, especially at its offshore fields, as well as a lack of upstream investment. Production peaked at around 1.9 million b/d in 2008.

S.Korea LNG imports set to ease from record as power firms guzzle less gas (Reuters) – South Korean imports of liquefied natural gas are set to ease from record levels racked up in the first-half of the year, with appetite for the fuel from utilities seen fading as a raft of nuclear power stations come back online. The country’s imports of the commodity jumped nearly 16 percent year-on-year to a record 22.7 million tonnes in the first six months of 2018, according to customs data in mid-July, boosted by demand from power firms as around half the nation’s 24 nuclear plants were shut for maintenance. But with an average of only six reactors expected to be offline over the rest of the year, analysts say shipments of LNG into the world’s No.3 importer of the fuel are likely to decline. “(LNG) demand in the second-half won’t be as strong as in the first-half because nuclear run rates will rise,” said Yang Ji-hae, an analyst at Samsung Securities. South Korea mainly consumes natural gas for heating and cooking, although it has been pushing to use the fuel more in power generation as it looks to switch away from coal and nuclear. Gas power generation made up 29.1 percent of the country’s overall electricity output in January-May, up from 20.4 percent last year, according to Reuters calculations based on data from Korea Electric Power Corp. That compares to the share of nuclear power at 20.8 percent, down from typical levels of around 30 percent.

China gasoil exports build surplus, hold Asia cash spread to multi-year lows (Reuters) – China’s record-breaking gasoil exports have built a surplus of the fuel in Asia, sending the region’s gasoil cash differentials to Singapore assessment prices to multi-year lows, with no sign the glut is set to subside through the third quarter. Cash differentials for Asia’s benchmark 10 parts-per-million (ppm) grade, gasoil containing 0.001 percent sulphur, sank to a discount of 25 cents a barrel to Singapore prices on July 2, the lowest since Reuters started tracking the grade in late 2011. The differential GO10-SIN-DIF has held near that level since then, although narrowing slightly. “Singapore 10 ppm gasoil usually trades at a premium but is now trading at a discount as it is very bearish,” said a Singapore-based veteran trader of middle distillates. “The bearishness is more a result of supplies coming from China and sellers having few outlets as the Asia-Latin America trade flow is shut,” the trader said. China’s diesel exports have been surging as refiners there have been running at record rates. China’s March gasoil exports reached 2.4 million tonnes, surpassing an earlier record of 2 million tonnes in November 2017. Between January and May, China exported about 8.5 million tonnes of diesel, 6.5 times higher than in 2015 and up 27 percent versus 2017 over the same periods. The rising gasoil supplies have prompted refiners to search for new markets, with Sinopec Tianjin Refinery shipping a parcel to Australia last month for the first time. “Yield shifts towards gasoil/diesel are becoming observable in the latest rounds of data,” said Eugene Lindell of the JBC Energy Research Team, a consultancy firm based in Vienna. The shift towards middle distillates – caused by price incentives over other fuels – could also mean higher exports including from South Korea and India, Lindell said. The recovery in crude oil prices has weighed heavily on most fuels, although middles distillates gasoil and jet fuel have fared better than products such as gasoline and naphtha. India exported 8.8 million tonnes of gasoil over January-April versus 8.4 million tonnes for the same period last year. South Korea exported 71.6 million barrels (9.5 million tonnes) for the first five months this year, down 1.4 percent during the same period last year, according to data from state-run Korea National Oil Corp.

Analysis: China’s crude import growth slips into the red, may fall further – The pace of growth in China’s crude imports may slow in H2 as a cocktail of lower runs at independent refiners, potential delays in the start up of some refineries and higher inventories curb the appetite for cargoes by Asia’s largest oil consumer. The first signs of feeble interest in cargoes were visible in the June data, which showed imports falling 4.9% to a six-month low of 4.35 million mt, or 8.39 million b/d, marking the first year-on-year drop in 2018, data from the General Administration of Customs showed. “We think crude imports in H2 2018 will likely ease to an average of 9.01 million b/d, from 9.08 million b/d seen in H1 2018,” S&P Global Platts Analytics’ senior analyst Zhuwei Wang said. Wang attributed the expected slowdown in crude oil import growth in H2 to a variety of factors. While Zhejiang Petrochemical will likely delay the start of trial runs until Q1 2019, Hengli Petrochemical might be fully commissioned only in early 2019. This will curb the potential for higher crude imports in H2 2018, he said. Even the start of the 100,000 b/d primary capacity expansion of PetroChina’s Huabei refinery in Q4, and the restart of operations at Fuhaichuang Petroleum and Petrochemical’s 4 million mt/year condensate splitter in Q3 are unlikely to support crude imports, as they would only be able to do trial runs this year. “In addition, crude inventories piled up at both state oil companies and independent refineries in H1 2018, which will likely incentivize destocking in Q3, and cut the appetite for higher crude imports in July and August,” Wang added. Monthly crude imports by China were lower than June 2018 levels only in December 2017, which saw inflows of 7.97 million b/d, customs data showed. The fall in June inflows was in line with expectations.

De-Dollarization: Chinese Refiner Replaces US Imports With Iranian Crude – An independent Chinese refiner has suspended crude oil purchases from the United States and has now turned to Iran as one of its sources of crude, media reports cited an official from the refiner, Dongming Petrochemical Group, as saying. The source said Beijing is planning to slap tariffs on US crude oil imports and replace them with West African and Middle Eastern crude, including crude from Iran, Oil Price reported. China has already said that it will not comply with US sanctions against Iran and it seems to be the only country for now in a position to do this. US crude oil exports to China reached 400,000 barrels per day at the beginning of this month, but now Beijing is planning to impose a 25% tariff on these as part of its retaliation for Trump’s latest round of tariffs on $34 billion worth of Chinese goods. The retaliation began with tariffs on 545 US goods worth another $34 billion, but Reuters reports that oil tariffs will be announced at a later date. Energy analysts seem to believe that these oil tariffs are more or less a certainty, and now expect a reshuffle of crude oil imports to Asia. With China turning to Iran for its crude, US oil could start flowing in greater amounts to another leading importer in the region, South Korea.“If China retaliates with tariffs on US crude, that could improve South Korea’s terms of buying US crude … because the US would need a market to sell to,” an analyst from the Korea Energy Economic Institute said. Meanwhile, South Korea’s Embassy in Iran this weekend rejected media reports that the country had suspended oil purchases from Iran under pressure from the United States. The US has pressed South Korea and some other nations to cut down its purchase of Iranian oil to zero or face so-called secondary sanctions. The deadline is Nov. 4 when the 180-day grace period ends.

U.S. Expects China to Buy Even More Iranian Oil After Sanctions – There is one big hitch in U.S. plans to stem buying of Iranian oil: China. Some in Washington now expect that China will vacuum up much of the Iranian oil that other nations won’t buy because of the threat of U.S. sanctions, according to a senior U.S. government energy official. China buying extra Iranian oil could dull the economic impact of those sanctions. It could also bring Iran closer to China at a time of elevated tensions between Washington and Beijing over trade.In May, President Donald Trump pulled the U.S. out of the 2015 Iran nuclear deal and vowed to reimpose sanctions on Tehran. Oil prices jumped sharply higher in reaction and if China does take spare Iranian crude that could add to pressure currently pushing crude lower, traders say.In anticipation of sanctions, foreign oil companies are already exiting Iran and international banks have declined to finance oil trades. While the European Union doesn’t back renewed sanctions, countries including Greece and Turkey, are winding down their purchases. But China, already the largest buyer of Iranian oil, is gearing up to take more, said the senior official. Tehran is currently in negotiations with Chinese companies to ensure that, according to an Iranian oil official involved in those talks.“We don’t have any problem selling our oil” to China, the Iranian official said.The White House referred calls to the U.S. National Security Council, which didn’t respond to emails seeking comment. China’s Foreign Ministry and the country’s two biggest oil companies, China National Petroleum Corp. and China Petrochemical Corp., didn’t respond to requests for comment. In the past Beijing has decried the U.S.’s resort to unilateral “long-arm” sanctions in international dealings.Having initially indicated the goal was to reduce Iranian exports to zero, the U.S. government has tempered its expectations. Last week, U.S. Secretary of State Mike Pompeo said the U.S. would consider Iran sanctions relief for a “handful” of countries. South Korea, India and a handful of other countries had a waiver to buy Iranian oil during the last round of sanctions. But Washington has also said that it will pursue Chinese companies with U.S. connections if they violate Iran sanctions.“It is our intent to enforce sanctions on Iran related oil against everybody including China,” U.S. Treasury Secretary Steven Mnuchin told the House Financial Services Committee last week.

Russia to invest $50bn in Iran’s oil & gas – report – Moscow and Tehran are expanding economic cooperation, with Russia planning multi-billion dollar investments in Iran’s energy sector. The move comes as major Western firms are pulling out of Iran amid the threat of US sanctions. “Russia is ready to invest $50 billion in Iran’s oil and gas sectors,” Senior Adviser for International Affairs of the Supreme Leader of the Islamic Republic Ali Akbar Velayati was cited as saying by the Financial Times.Velayati met with Russian President Vladimir Putin last week in Moscow. The sides focused on Russian-Iranian cooperation as well as the situation in the region. According to the Kremlin, they reaffirmed their commitment to the Joint Comprehensive Plan of Action on Iran’s Nuclear Deal (JCPOA). An unnamed official from the Russian government confirmed Russia’s $50-billion investment plans to the Financial Times. A Russian oil company has signed an agreement with Iran worth $4 billion, Velayati said, without specifying the name of the company. He added that the deal “will be implemented soon.” Russian energy giants Rosneft and Gazprom are also in talks with the oil ministry of Iran to potentially sign deals worth up to $10 billion, according to an Iranian official. Earlier this year, an agreement was inked by a local Iranian company, Dana Energy, in a consortium led by Russia’s Zarubezhneft, with the National Iranian Oil Company (NIOC). They seek to redevelop the Aban and West Paydar oilfields, with a total capital expenditure estimated at around $740 million.Russia’s Energy Minister Alexander Novak said on Friday that Moscow was studying all legal implications of a possible deal with Tehran, under which Russia would provide goods to Iran in exchange for oil.Meanwhile, the European Union fears that billions of dollars’ worth of trade could be jeopardized as a result of Washington’s new sanctions on Iran.

European Governments Explore Financial Channels for Iran – The French, British and German governments have told Iran they are exploring activating accounts for the Iranian central bank with their national central banks in a bid to open a financial channel to keep alive the Iranian nuclear deal, according to several European officials. The move is the first concrete sign that Europe could deliver on its promise to take steps to sustain the Iranian nuclear deal, setting European governments squarely against the Trump administration’s Iran sanctions policy aimed at isolating Tehran economically.Following the U.S. withdrawal from the deal in May, Iran has said it would stop complying with the nuclear deal unless it continues to receive the economic benefits of the 2015 agreement. That deal saw most international sanctions on Tehran lifted in exchange for strict but temporary restrictions on Iran’s nuclear work. Officials involved in discussions said the option of central banks activating Iranian central bank accounts – or reactivating some which have been dormant for years – is one of several that European governments are actively exploring. The three European governments laid out their plans to Iran during discussions earlier this month among foreign ministers and senior officials in Vienna. Officials said they are still trying to iron out details. Other European governments, including Austria and Sweden, have also said they would consider doing likewise, the officials said.However, officials stressed that while discussions have started with central banks, they haven’t yet received buy-in. European central bank officials have said there is reluctance to forge financial links with Iran as the U.S. prepares to reimpose sanctions.

Zanganeh: OPEC Members Not Allowed to Pump Above Target – Iran’s Oil Minister Bijan Namdar Zanganeh in a letter told his Saudi Arabian counterpart that last month’s OPEC supply pact does not give member countries the right to raise oil production above their targets. OPEC agreed with Russia and other oil-producing allies last month to raise output from July, with Saudi Arabia pledging a “measurable” supply boost but giving no specific numbers, Reuters reported. “Member countries committed themselves to reach a production adjustment conformity level of 100%, as of July 1, 2018,” the letter said. “However, the aforesaid decision neither warrants member countries the right to exceed their production level above the allocated production level decided … nor the right to redistribute the unfulfilled production adjustment commitments among member countries.” Zanganeh’s letter comes after Falih, who chairs a joint committee of OPEC and non-OPEC members for monitoring production compliance, wrote to OPEC last week saying that individual conformity levels will no longer be reported. Zanganeh’s comments underline the still-simmering tensions after OPEC’s meeting last month. Saudi Arabia said the deal allowed countries able to produce more to meet the group’s overall conformity level, meaning some members, such as itself, are to make up for shortfalls elsewhere.

US Treasury Secretary: Washington to Consider Waivers on Iran Sanctions –The US in certain cases will consider waivers for countries that need more time to wind down imports of oil from Iran as it seeks to avoid disrupting global oil markets while reimposing sanctions against Tehran, US treasury secretary Steven Mnuchin said. “We want people to reduce oil purchases to zero, but in certain cases, if people can’t do that overnight, we’ll consider exceptions,” Mnuchin told reporters on Friday, clarifying some US officials’ comments that there would be no exemptions. Mnuchin’s comments were embargoed for release on Monday as other US officials were expected to begin talks in India this week on cutbacks in Iranian oil supplies. Mnuchin spoke to reporters while en route from Mexico, where he was part of a high-level US delegation led by Secretary of State Mike Pompeo to meet Mexico’s next president, Andres Manuel Lopez Obrador. The Trump administration is pushing countries to cut all imports of Iranian oil from November when the US reimposes sanctions against Tehran. Trump withdrew from the multi-national 2015 Iran nuclear deal against the advice of allies in Europe and elsewhere. A delegation from the US State Department and US Treasury are expected for talks in Delhi this week to discuss Iran sanctions, according to Indian officials. The US crude oil exports to India hit a record in June as Indian refiners moved to replace supplies from Iran and Venezuela. Andrew Lipow, president of Lipow Oil Associates in Houston, said India was expected to ask the US to ensure adequate global oil supplies as Washington presses countries to cut back on Iran oil. “That might include pressure to release oil from the Strategic Petroleum Reserve, which the administration indicated they were considering on Friday,”

Saudi oil exports slip below 7 million b/d after refinery restarts – Saudi Arabia’s crude oil exports fell below 7 million b/d to a seven-month low in May after the restart of a major refinery absorbed higher crude output from OPEC’s biggest producer during the month. Saudi crude oil exports in May fell by 328,000 b/d month on month to 6.98 million b/d, the lowest since October, according to data from the Riyadh-based Joint Organizations Data Initiative. The lower May export figure came as overall crude production rose 160,000 b/d month on month to 10.03 million b/d. At the same time, crude used for the refining rector jumped by 403,000 b/d, or 18%, after the Satorp refinery — a 400,000 b/d joint venture between Saudi Aramco and Total in Jubail — returned from a maintenance shutdown in the first quarter. The plant, which was expected to restart in April, said last week it had shipped RBOB (reformulated blendstock) gasoline to the US the first time. Crude used directly to fuel power generation plants, which rises seasonally due to higher summer demand for air conditioning, also rose in May, according to the data. So-called “direct burn” crude was 24,000 b/d higher month on month at 412,000 b/d, the highest since last September. Combined, Saudi Arabia’s domestic crude use rose to 3.02 million b/d in May, up from 2.588 in April but below the May 2017 total of 3.12 million b/d. The data covered the month before OPEC’s meeting late June saw the producer group, Russia and other allies agree to a 1 million b/d output boost to ease expected market tightness before US sanctions crimp Iran’s exports from next month.

U.S. and Allies Consider Possible Oil-Reserve Release – U.S. and Western officials are considering an eventual emergency release of stockpiled oil if new supplies can’t prevent another sharp rise in prices, according to people familiar with the matter. The Trump administration is actively assessing whether to dip into the country’s emergency oil stocks while it simultaneously pushes other countries to boost their output, according to people familiar with the matter. The discussions are part of a broader effort to ensure oil markets remain well supplied amid a host of production disruptions around the world, and rising global demand. Any draw down of the so-called Strategic Petroleum Reserve isn’t imminent, according to people familiar with the matter. Such releases have been rare, and typically only as a last resort. The current discussions about such a move – while preliminary – -underscore growing worry among consuming nations over supplies. OPEC and Russia have committed to pumping more crude to ease markets, but a host of global production constraints – and rising demand – have raised questions about whether that new oil will be enough. Some senior Trump advisers are strongly opposed to the idea, and the administration is primarily concerned with keeping its options open, according to people familiar with the matter. Meanwhile, Fatih Birol, director of the International Energy Agency, a group that advises industrialized nations on energy policy and coordinates emergency oil releases globally, told a private dinner last month that a release was an option if supply outages worsen, according to people at the dinner. A few months back, a release of strategic oil reserves sounded far-fetched. In the past, such a move has been a last-ditch option, often triggered by war. There have been just three IEA-coordinated releases – the most recent was in 2011 at the height of the Arab Spring.

U.S. SPR oil release would be a mistake: Kemp (Reuters) – The United States is considering releasing crude stocks from the SPR, possibly in conjunction with its partners in the International Energy Agency (IEA), according to news reports, to prevent a sharp rise in oil prices.“The Trump administration is actively assessing whether to dip into the country’s emergency oil stocks while it simultaneously pushes other countries to boost output,” the Wall Street Journal reported on July 13.Releasing crude oil from the U.S. Strategic Petroleum Reserve (SPR) in response to a rise in prices resulting from the reimposition of sanctions on Iran would be a mistake and ultimately self-defeating. The SPR has sufficient crude to offset any loss of exports from Iran for many months, especially if stock releases are combined with increased oil production by Saudi Arabia and other members of OPEC. The statutes governing the operation of the SPR grant the U.S. president broad discretion to order a drawdown, and any order is unlikely to be constrained by Congress or the courts. But the SPR was established to deal with short-term interruptions of crude supplies and is not suited to managing long-term changes in the supply situation. In particular, if the purpose is to relieve upward pressure on prices, it would blunt the signal needed to help the market adapt to sanctions. If the SPR release succeeded in holding down prices, it would discourage the rise in production needed to replace lost Iranian barrels, while allowing rapid consumption growth to remain unchecked. Deploying the SPR to manage a loss of Iranian oil supplies would ultimately prove self-defeating, and deplete the reserve if pursued for any length of time. Like a buffer-stock management system, which can even out short-term shifts in supply and demand, but not enduring ones, the SPR is best employed to deal with short-term supply interruptions, not long-term changes.

Wood Mackenzie: Global oil demand could peak by 2036 – Global oil demand could peak within 20 years driven by a rapid shift towards electric vehicles (EVs). That is the conclusion of one of the world’s most influential oil consultancies, Wood Mackenzie, which last recently warned its clients oil demand could begin to decline much earlier than many of oil majors expect. In comments reported by the FT, Ed Rawle, Wood Mackenzie’s head of crude oil research, revealed the company had reappraised its projections for lone term oil demand and is now predicting oil consumption will peak around 2036. The projections are the centrepiece of the company’s flagship long term energy outlook briefing, which was distributed to clients in May but was reported on for the first time by the FT today. The report provides further evidence of how the oil industry is starting to plan for a potential peak in oil demand. “A lot of our clients recognise that peak demand is real,” Rawle was quoted as saying. “It’s just a question of when it arrives.” However, Wood Mackenzie’s 2036 date for peak oil demand is significantly earlier than the date included in many oil majors’ base case scenario planning and investment plans. As such it is likely to further fuel fears that oil and gas companies could end up creating a ‘carbon bubble’ whereby they invest in assets that become overvalued and stranded. Some oil majors have started to acknowledge a peak in oil demand could come by the 2030s or even earlier, if demand for EVs accelerates. However, others maintain oil demand will continue to rise throughout much of the first half of the century, breaking carbon budgets and making the goals of the Paris Agreement on climate change unattainable in the process.

Hedge funds quiet before oil-price plunge (Reuters) – Hedge fund managers made few adjustments to their positions in the petroleum complex in the week ending on July 10, as the market remained calm – before oil prices plunged the following day. Hedge funds and other money managers raised their net long position in the six most important futures and options contracts linked to petroleum prices by just 6 million barrels in the seven days to July 10. Net length increased for the third week running but the rise was much smaller than in the week ending July 3 (+47 million barrels) or June 26 (+36 million) indicating the recent wave of position-building was largely complete. Portfolio managers cut net long positions in Brent (-10 million barrels) while adding them in NYMEX and ICE WTI (+1 million), U.S. gasoline (+6 million), U.S. heating oil (+5 million) and European gasoil (+4 million). The previous position-building in WTI ran out of steam, with fund managers adding just 1 million barrels of net long positions, compared with 41 million and 75 million in the two prior weeks. While crude contracts continued to come under selling pressure, funds started or continued to add slightly to bullish positions in refined fuels (https://tmsnrt.rs/2KZZ67a) . The very limited position changes in the week to July 10 suggest most fund managers had completed adjusting their positions after a bout of profit-taking on crude and fuels that began in late April. But Brent positions have declined in 10 out of the last 13 weeks, and with no new buying in WTI, the gentle downward pressure on prices and calendar spreads finally turned into a torrent just one day later.

Crude falls sharply as rising output outweighs supply shocks from Norway, Libya; Brent $73.88/b, WTI $69.69/b – Crude futures fell sharply in European trading on Monday morning, as signals of rising output from the US and OPEC members offset a string of supply strains, including a strike at Norwegian oil fields and a kidnapping at the Sharara field in Libya. At 1130 GMT, September ICE Brent was down $1.45 from Friday’s settle at $73.88/b, while the August NYMEX crude price was down $1.32 to $69.69/b.That dip comes amid signals that overall supplies could rise, with the US heard to be mulling tapping into stockpiles over the summer months, alongside larger offers of crude from Saudi Arabia and higher Russian output.Reports over the weekend suggested that the Trump administration is considering releasing additional supplies to prevent price spikes, while Saudi Arabia was heard to be offering larger volumes to customers in Asia who have pulled back sharply on Iranian imports. Russian officials have also said they will bring 200,000 b/d of additional product back into the market for June as production cuts ease.”Over the weekend there were a string of supply-side developments that would have been supportive,” said Harry Tchilinguirian at BNP Paribas in London, from disruptions in Libya and Norway to longer-running supply threats including Iranian sanctions and the decline of Venezuelan output.”However, all these elements are trumped by the fact that the US may be thinking of tapping into the US [Strategic Petroleum Reserve] over the summer, with the view of preventing any price spikes.”Meanwhile, strikes on Norwegian oil and gas rigs by unions were expected to dramatically expand over the course of Monday, extending last week’s strike of 669 workers on offshore rigs, over pay disputes. That closed the Knarr field, operated by Shell.That was not expected to have an immediate impact on output, but could eventually dent total output if the strike continues.Over the weekend, production at Libya’s largest oil field dropped by almost half following a kidnapping of four workers, according to the state-owned National Oil Corporation. That was at the Sharara oil field in the country’s southwest region, which as an output of about 340,000 b/d and is jointly controlled by Total, Repsol, Statoil and OMV. The field has been plagued by closures in recent years. That came on the heels of a force majeure declared at Libya’s 90,000 b/d El-Feel oil field, which was only ended on Thursday.

Brent, WTI Prices Slide as Disruption Concerns Ease – Oil prices slipped on Monday as concerns about supply disruptions eased and Libyan ports reopened while traders eyed potential supply increases by Russia and other oil producers. But global supply remained tight with investors wary over the impact of production losses in several exporting countries, CNBC reported. Brent crude slid 30 cents at $75.03 a barrel. US light crude was down 50 cents at $70.51. Supply outages in Libya, a labor dispute in Norway and unrest in Iraq all helped push oil prices higher late last week, although prices still fell for a second straight week. Russia and other oil producers may raise output by 1 million barrels per day or more if shortages hit the market, Russian Energy Minister Alexander Novak told reporters on Friday. “If we need more than 1 million bpd, I do not rule out that we can quickly discuss it and make a quick decision.” Production at Libya’s giant Sharara Oilfield was expected to fall by at least 160,000 barrels per day after two staff were abducted in an attack by an unknown group, the National Oil Corporation said on Saturday. A Norwegian union for workers on offshore oil and gas drilling rigs on Monday stepped up a six-day strike that has hit oil output. Investors are also on edge over the impact of trade dispute between the United States and its big trading partners.

Crude Oil Prices Settle 4% Lower as Traders Cut Supply Shortage Bets – WTI crude oil prices settled sharply lower Monday, pressured by expectations for an increase in supplies after U.S. Treasury Secretary Steve Mnuchin said some crude importers may receive waivers to continue buying supplies from Iran. On the New York Mercantile Exchange crude futures for August delivery fell 4.2% to settle at $68.06 a barrel, while on London’s Intercontinental Exchange, Brent fell 4.5% to trade at $71.92 a barrel. “We want people to reduce oil purchases to zero, but in certain cases if people can’t do that overnight, we’ll consider exceptions,” Mnuchin told reporters on Friday, Reuters reported. The comments were not released until Monday morning. This somewhat softer outlook on restrictions of Iranian crude oil buyers comes as U.S. President Donald Trump has repeatedly called on OPEC to address the sharp uptick in oil prices, which rose earlier this month, to levels not seen since November 2016. With the drop in Iranian crude supplies likely to be less than many had anticipated, investors have lowered expectations for a shortage in global crude supplies. Expectations of increased crude supplies were heightened as Libyan ports reopened, while Iraq output reportedly soared in the first half of the July . Iraq crude exports jumped 6% to 4.05 million barrels a day (bpd) in the first half of July from 3.839 million bpd for the entire month of June, according to tanker tracking and data from port agents compiled by Bloomberg. The slump in oil prices comes as oil market observers were monitoring potential comments on oil markets at the meeting between President Donald Trump and Russian President Vladimir Putin on Monday. Putin hinted that the U.S. and Russia could work together in a constructive way to regulate the international energy markets as an extreme drop in prices was not in Russia’s interest. That, however, did little to stem the plunge in oil prices, as attention shifted toward weekly U.S. petroleum inventory data from the American Petroleum Institute on Tuesday, and from the Energy Information Administration on Wednesday.

Is This The End Of The Oil Rally? – Oil prices were mostly flat at the start of trading on Tuesday, after having posted two of the worst single-day declines over the past week. The oil market has seen a sudden shift in sentiment compared to just a week ago. There are several reasons for this: The return of oil from Libya, the lifting of force majeure on a key oil stream in Nigeria, the anticipated return of oil from an outage in Canada, increased production from Saudi Arabia and the prospect of an SPR release from the U.S. Taken together, the oil market doesn’t seem as desperate for supply as it did a week ago. Saudi Arabia is offering extra volumes of oil to some buyers in Asia, according to Bloomberg, a sign that the Kingdom is going further to ensure the market is adequately supplied. It also suggests that Russia and Saudi Arabia are likely set to go beyond what was agreed to at the OPEC+ meeting, which called for an additional 1 mb/d of supply. Saudi Arabia also said that OPEC+ would no longer focus on country-specific output limits but instead would heed a collective target, a switch that would free Saudi Arabia to ramp up production. Royal Dutch Shell lifted force majeure on Bonny Light in Nigeria following the repair of the Nembe Creek Trunkline. Bonny Light represents about 200,000-250,000 bpd, and Shell had put it under force majeure in May because of problems with the pipeline. The return of Bonny Light has helped ease concerns regarding global supplies.

Oil Prices Edge Up After Slumping More Than 4% Following Mnuchin’s Comments – Oil prices rebounded on Tuesday after plunging more than 4% in the previous session as U.S. Treasury Secretary Steven Mnuchin said the U.S. is considering waivers on Iran sanctions for some crude importers. Crude Oil WTI Futures for September delivery were trading at $67.16 a barrel at 12:05AM ET (04:05 GMT), up 0.15%. Brent Oil Futures for September delivery, traded in London, were also up 0.5% at $72.18 per barrel. Mnuchin told reporters that the U.S. wants to avoid disrupting global oil markets and is considering waivers for countries that need more time to wind down imports of oil from Iran while reimposing sanctions against Tehran. President Donald Trump withdrew the U.S. from the 2015 Iran nuclear deal and restored sanctions on Tehran in May. “We want people to reduce oil purchases to zero, but in certain cases if people can’t do that overnight, we’ll consider exceptions,” Mnuchin said. His comments contradicted some U.S. officials’ comments earlier that said there would be no exemptions. Officials from the U.S. State Department and U.S. Treasury are expected for talks in Delhi this week to discuss Iran sanctions, according to Indian officials. Meanwhile, recent reports that Saudi Arabia offers more crude cargoes to Asian customers were also cited as headwind for oil prices. Meanwhile, U.S. President Donald Trump was reportedly considering tapping the nation’s emergency oil supply to tame rising fuel prices. U.S. West Texas Intermediate crude oil prices ended Monday’s session down $2.95, or 4.2%, at $68.06.

Oil slips as focus turns to surplus from shortage – U.S. crude oil futures fell on Tuesday as worries over supply disruptions eased and the focus moved to increasing domestic production and potential damage to global growth from the U.S.-China trade dispute. U.S. West Texas Intermediate crude (WTI) was 81 cents lower at $67.26 a barrel by 10:53 a.m. EDT [1453 GMT]. It lost 4.2 percent on Monday.Brent futures rose 9 cents to $71.93 a barrel, after earlier trading as low as $71.35 a barrel, its lowest since April 17. Brent fell 4.6 percent on Monday. “Fears of shortages, which pushed prices as high as $80 per barrel in early summer, are receding and concerns about looming surpluses growing,” The market is waiting for clear signals on supply, including whether the U.S. will release crude from its Strategic Petroleum Reserve and whether Libya’s oil production will rebound following military clashes in late June and early July, said Tariq Zahir, managing member at Tyche Capital in New York.“You really have to see how much Saudi is going to produce, along with Russia,” he said. Russian crude production could also ramp up, restoring 300,000 barrels per day (bpd) that were cut in an agreement with OPEC, he said.“I think we’re going to get to a more balanced market as we get to the fourth and first quarter of next year.”Oil prices have fallen by almost 10 percent over the last week as crude export terminals in Libya have reopened and exports from other OPEC countries and Russia have increased. Production from seven major U.S. shale oil formations is expected to rise by 143,000 bpd to a record 7.47 million bpd in August, the U.S. Energy Information Administration said on Monday. Output is expected to rise in all seven formations.

WTI Drops After Surprise Crude Build — Oil prices rebounded to unchanged intraday on hopes that tonight’s API data would show a notable draw and recover the momentum in energy markets. However, WTI dropped as API reported a surprised crude build of 629k (exp was a 4.1mm draw).“We’re expecting a fairly bullish report tonight, a significant decline in U.S. crude oil inventories again,” said John Kilduff, a partner at New York-based hedge fund Again Capital LLC. At the same time, we’re seeing “short-covering and profit-taking at the moment from the big sell-off.”API

• Crude +629k (-4.1mm exp)
• Cushing -1.34mm (-700k exp)
• Gasoline +525k
• Distillates +1.711mm

Following last week’s massive crude draw (and distillates build), API reported a surprising 629k barrel build (massively missing the 4.1mm draw expected), and Gasoline and Distillates also saw builds… WTI traded flat around $68 heading into the API print then tumbled on the surprise crude build…

Oil Prices Drop as U.S. Crude Inventories Unexpectedly Rise – Oil prices declined on Wednesday after a slight increase in the previous session amid a surprise surge in US crude inventories reported last week. Crude Oil WTI Futures for September delivery fell 0.42% to $66.88 per barrel at 12:22AM ET (04:22 GMT), while Brent Oil Futures dropped 0.3% to $71.94 for one barrel. After rising to over $72 per barrel yesterday, Brent oil went back on the dropping track, as the American Petroleum Institute revealed a rise of over 600,000 barrels in US crude stockpiles last week. Meanwhile, Libya reopened its ports and started exporting oil again after the closures of its oil field. The country’s National Oil Corporation announced its force majeure on exports from Zawiya oil terminal on Tuesday, in a bid to boosting national production. The organisation’s Chairman Mustafa Sanalla said, “We have to prioritize local demand for fuel. For the time being all, Sharara production will go to the refinery.” Iran, the world’s fifth largest oil producer, filed a lawsuit at the International Court of Justice against sanctions imposed by the U.S. in May, alleging that they violated a 1955 bilateral treaty between the two countries. The Islamic country asked the sanctions to be lifted provisionally. On Monday, the US Treasury Secretary Steven Mnuchin said Washington might grant waivers to Iran oil purchases.

US Crude Oil Inventories Surge After Production Spikes, Exports Crash – — WTI was still trading lower after API reported last night’s surprise crude build, and traded lower initially after DOE reported a massive surprise crude build. Additionally, US production hit 11mm b/d for the first time ever.As Bloomberg Intelligence’s Senior Energy Analyst Vince Piazza notes, even as U.S. crude inventories drain, concerns persist over global growth amid trade tensions driven by geopolitics and an increase in OPEC quotas. Slowing demand for refined products, which is tied to higher crude prices and emerging-market struggles, has dampened optimism for U.S. refiners. ADOEPI

• Crude +5.84mm (-4.2mm exp) – biggest build since April
• Cushing -860k (-700k exp)
• Gasoline -3.17mm
• Distillates -371k

After last week’s massive draw (and API’s surprise build), this week saw a huge rebound in crude inventories But while US crude inventories surged, Cushing continues to draw down…Permian pipeline bottlenecks continue to pressure discounts… But production resumed its rise (after a 3-week stall) up 100k b/d, hitting 11mm b/d for the first in history…

Crude Edges Up as Fuel Supply Drop Outweighs Rising Crude Stocks (Bloomberg) — Crude rose as investors assessed conflicting supply-and-demand signals in the world’s biggest economy. Futures in New York wavered between gains and losses during the session before settling 1 percent higher on Wednesday. Gasoline held in U.S. storage tanks dropped by the most since May and fuel demand increased, according to data from the Energy Information Administration. Those factors overshadowed the biggest increase in American crude inventories since April. “This is what happens when you get the largest imports we’ve had during the year and the lowest exports we’ve had for three months,”said Rob Thummel, managing director at Tortoise, which manages $16 billion in energy-related assets. “The lone positive for the bulls is the gasoline draw was very strong. Obviously, gasoline demand seemed to bounce back this week.” The surprise jump in U.S. crude inventories occurred against the backdrop of looming production increases from Saudi Arabia, Russia, Libya and other major sources. During a meeting in Vienna on Wednesday, OPEC and allied producers discussed how much individual nations plan to produce this month but didn’t go so far as to formally share out a planned output increase across the cartel, according to people familiar with the matter. West Texas Intermediate crude for August delivery added 68 cents to settle at $68.76 a barrel on the New York Mercantile Exchange, the biggest gain in more than a week. Total volume traded was about 25 percent below the 100-day average. Brent for September settlement rose 74 cents to end the session at $72.90 on the London-based ICE Futures Europe exchange, and traded at a $5.15 premium to WTI for the same month. U.S. WTI hovered just above its 100-day moving average after London’s Brent settled below that level on Monday for the first time since March. The EIA reported U.S. crude inventories rose by 5.84 million barrels last week, confounding most analysts in a Bloomberg survey who were forecasting a decline. Purchases of foreign oil jumped the most since the start of 2017, while crude exports slid for a third week, contributing to the inventory build.

Proposed Law Would Allow U.S. to Sue OPEC for Manipulating Oil Market – Exasperated by high gasoline prices just ahead of the U.S. midterm elections, lawmakers in Congress are trying to make it easier for the United States to sue OPEC. And unlike previous failed efforts to go after the oil-exporting cartel, this time Congress will find a sympathetic ear in the White House. The bipartisan No Oil Producing and Exporting Cartels Act, or NOPEC bill, would tweak U.S. antitrust law to explicitly ban just the kind of collusive behavior that OPEC was created to engage in. The bill, a carbon copy of previous legislation, makes illegal any activity to restrain the production of oil or gas or set oil and gas prices and knocks away two legal defenses that in the past have shielded OPEC from U.S. antitrust measures.The NOPEC bill passed handily out of the House Judiciary Committee last month and could go to the floor this summer for a full vote. A different bill in the Senate seeks to rein in OPEC by opening the door to complaints at the World Trade Organization if the cartel jacks up prices by capping its oil output, part of a double-barreled effort to hold big oil producers’ feet to the fire. “The objective of this legislation is to tell OPEC once and for all that they can no longer collude to fix the price of oil,” said Brian Griffith, a spokesman for Rep. Steve Chabot, an Ohio Republican, who co-sponsored the bill. “If they do, they can be held accountable under our laws and in our courts.” Political anger at OPEC tends to rise alongside oil prices; the first effort to use antitrust law against the oil cartel came in the late 1970s after a pair of nasty energy shocks. At the time, lower courts avoided the political hot potato by ruling, among other things, that other governments have sovereign immunity from the long arm of U.S. law. Now, rising oil prices are again stoking predictable anger in Washington – prompting the same legislative exercise. Crude has risen more than 60 percent since last summer, pushing up gasoline prices to close to $3 a gallon nationwide.

Putin suggests Russia and US could work together to regulate oil prices – Russian President Vladimir Putin suggested that Moscow and Washington could cooperate to soothe volatility in the oil market that has roiled the industry in recent years. Russia has partnered with OPEC and other producer nations since 2017 to manage nearly half of the world’s oil supply. The countries took action after crude prices sank to 12-year lows in 2016, piling pressure on oil-dependent economies and bankrupting hundreds of U.S. energy companies. The United States, where drillers compete in a free market, is not part of the deal. U.S. laws prohibit companies from colluding to fix prices, and a bipartisan group of U.S. Congress members recently revived a push to punish OPEC for alleged price-fixing. Still, Putin suggested that some form of cooperation is possible during a press conference with U.S. President Donald Trump in Helskinki on Monday. “I think that we as a major oil and gas power, and the United States as a major oil and gas power as well, we could work together on regulation of international markets, because neither of us is actually interested in the plummeting of the prices,” Putin said. “But nor are we interested in driving prices up because it will drain a lot of juices from all other sectors of the economy, so we do have space for cooperation here,” he said. Trump has demanded that OPEC tame fuel costs, after a slow-and-steady rally accelerated this year. Led by Saudi Arabia and Russia, the two dozen producer nations last month agreed to hike output to offset falling output in Venezuela and looming U.S. sanctions on Iran, the world’s fifth largest oil producer.

Oil prices mixed as producers adding more oil while U.S. gasoline stocks drop — (Reuters) – Oil prices were mixed on Thursday as the market struggled to digest signs of strong gasoline demand in the United States, the world’s biggest consumer of thefuel, with a statement from oil producers that they are putting more crude on the market.Brent crude futures fell 11 cents, or 0.2 percent,to $72.79 a barrel at 0401 GMT. West Texas Intermediate (WTI)crude futures CLc1 climbed 6 cents, or 0.1 percent, to $68.82.Both benchmarks rose by 1 percent on Wednesday after inventory data from the U.S. Energy Information Administration reported on Wednesday U.S. gasoline stockpiles fell along with supplies of distillate fuels. Motor fuel demand also rose fromthe week before and was up from a year earlier. However, the EIA also reported U.S. oil production reached arecord 11 million barrels per day (bpd). The United States has added nearly 1 million bpd in production since November, thanksto rapid increases in shale drilling. urn:newsml:reuters.com:*:nL1N1UE0QCAlso, a meeting of members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producer monitoring their supply pact reported on Wednesday that compliance with the agreement has declined, meaning more oil is available to the market. The bullish tone sparked by the gasoline data is unlikely tolast, said Stephen Innes, head of trading APAC at brokerage OANDA. “With Russia quick to offer the President a supply olivebranch and Saudi Arabia mainly in his back pocket when it comesto increasing their supply, its challenging to see (the)gasoline numbers turning the bearish market’s tide,” he said.

Brent slips as focus returns to oversupply (Reuters) – Global benchmark Brent crude dipped on Thursday as concerns about mounting supply returned after a brief rally earlier in the session on comments that Saudi Arabia’s exports would fall in August. Crude prices fell from session highs reached after Saudi Arabia’s OPEC Governor Adeeb Al-Aama statement that the kingdom expects crude exports to drop by roughly 100,000 bpd in August as it limits excess production. Brent oil fell 32 cents, to settle at $72.58 per barrel, previously reaching a session high of $73.79. U.S. West Texas Intermediate (WTI) was 70 cents higher, or 1 percent, settling at $69.46. U.S. crude prices had reached a session high of $70.17 earlier in the session before paring gains. Crude prices pulled back from highs earlier in the session as traders cashed in on profits, said John Kilduff, a partner at Again Capital Management in New York. Prices, which had strengthened on news of Saudi Arabia’s planned export cuts, fell as the market’s focus returned to potential oversupply as Saudi Arabia, Russia and other major producers continue to lift output. OPEC and non-OPEC producers cut oil output in June by 20 percent more than agreed levels, compared to 47 percent in May, two sources familiar with the matter told Reuters on Wednesday. “Just because the Saudis are trying to temper the fallout, doesn’t change the fact that they are increasing production,” Kilduff said. Commodities, under pressure from a strong dollar and a new wave of trade tensions that stoked fears of damage to economies and commodities, also weighed on prices. Earlier in the trading day, the U.S. dollar hit its highest level against a basket of other currencies since July 2017, up half a percent on the day.

Oil prices contend with strengthening U.S. dollar: Kemp (Reuters) – The rising value of the U.S. dollar against most other major currencies is creating an additional headwind for oil prices, as it pushes up the local price of crude and fuels across much of Asia, Europe and Latin America. In trade-weighted terms, the dollar has risen to its highest since late 2016 and early 2017, and before that 2002/2003 (https://tmsnrt.rs/2LzLuvB). Adjusted for inflation, the dollar’s trade-weighted value is close to its highest since 2004, according to the broad exchange rate index compiled by the Federal Reserve (https://tmsnrt.rs/2LC7Zjh).The U.S. dollar has appreciated by more than 8 percent against China’s yuan since the end of March, in response to the worsening trade tensions between the two countries.China overtook the United States to become the world’s largest crude importer in 2017 and net imports of crude and fuels are now running at around 9 million barrels per day.Brent crude prices have risen nearly 9 percent this year in dollar terms but are up more than 13.5 percent in yuan as a result of the exchange-rate shift.China’s currency depreciation is partly driven by bilateral tensions as the country’s authorities actively engineer or passively permit the exchange rate to act as a shock absorber (the practical effect is the same).But the U.S. dollar has also appreciated against every other major currency, including the euro, the Japanese yen, the British pound, the South Korean won and the Canadian dollar.The U.S. currency is also rising against most emerging-market currencies, including the Brazilian real, the Indian rupee and the Indonesian rupiah. In general, it is the U.S. dollar appreciating rather than other currencies depreciating, mostly as a result of strong economic growth in the United States, steadily rising interest rates and safe-haven capital flows. The result is that oil prices in most oil-consuming countries are now rising much faster than the international benchmark prices quoted in dollars.

Oil Regains Footing After Volatile Week -Oil prices held steady on Thursday and in early trading on Friday after a top Saudi official said that oil production would remain flat in July compared to June and that Saudi Arabia does not want to oversupply the market. Previous comments suggested that Saudi Arabia would ramp up to 10.8 million barrels per day (mb/d) in July, but instead the Saudis will keep output at 10.5 mb/d. U.S. oil production hit 11 mb/d last week, a new record high. A separate EIA report predicts that shale output will grow by another 143,000 bpd in August, compared to July. Gains will come from the Permian (+73,000 bpd), the Eagle Ford (+35,000 bpd), the Bakken (+15,000 bpd), plus smaller contributions from elsewhere. Meanwhile, the number of drilled but uncompleted wells (DUCs) increased by a massive 193 in June from a month earlier, most of which were concentrated in the Permian basin. The DUC backlog continues to swell as the Permian suffers from pipeline bottlenecks. Two of Venezuela’s four oil upgraders are slated to go offline for maintenance in the next few weeks, according to Reuters. The upgraders process heavy oil from the Orinoco Belt into an exportable form of oil, and they have a combined 700,000 bpd of processing capacity. The maintenance for the two upgraders throw up another obstacle for Venezuela, which saw its total oil production fall to just 1.34 mb/d in June. The Shia-majority in Southern Iraq have been protesting for two weeks, angry at corruption and an unemployment crisis. The protests have spread to other Iraqi cities, including Najaf, Amarah and even Baghdad. Most of Iraq’s oil wealth comes from Basra, but the majority of people in the south barely see any benefit.

Rig Count Drops As US Crude Output Hit 11 Million Bpd — Baker Hughes reported a decreased number of active oil and gas rigs in the United States on Friday. Oil and gas rigs decreased by 8 rigs, according to the report, with the number of active oil rigs falling by 5 to 858 this week, while the number of gas rigs dipped by 2, hitting 187.The oil and gas rig count now stands at 1,046 – up 96 from this time last year, with the number of oil rigs accounting for 94 of that 96.Canada gained 14 oil and gas rigs for the week, 11 of which were gas rigs. Canada’s oil and gas rig count is now up just 5 year over year. Oil rigs are up by 24 year over year in Canada, while the number of gas rigs are down by 19. The biggest loser by basin this week was Granite Wash, which lost 3 rigs. The only basin to gain rigs this week were Cana Woodford (+2), and Utica (+1). The Permian basin, which saw neither an increase or a decrease this week, and Cana Woodford, saw the biggest increases year over year. Cana Woodford now has 12 more rigs than this time last year, while the Permian has 102 rigs more than this time last year. WTI crude was trading down on Friday afternoon while Brent crude was trading up – widening the WTI discount to Brent. WTI was trading down 0.18% (-$0.12) at $68.12 at 12:34 pm EDT. Brent crude was trading up 0.25% (+$0.18) at $72.76 per barrel.Both benchmarks are trading significantly down week on week as the market treads carefully after OPEC committed to increasing production in order to more closely stick to its production cut agreement after months of under producing, and despite US production that this week, for the first time, hit a new psychologically important high of 11 million bpd, after hovering at 10.9 million bpd for multiple weeks. At 11 minutes after the hour, WTI was trading up 0.04% at $68.27, with Brent trading up0.34% at $72.83.

Oil prices finish higher, but suffer third weekly decline in a row – Oil futures settled higher Friday, finding some support as Saudi Arabia said it expects to reduce exports in August, easing some concerns of coming oversupply in the market.Prices, however, logged a third straight weekly decline on renewed trade-war fears after President Donald Trump said he was ready to impose tariffs on all $505 billion worth of Chinese imports. August West Texas Intermediate crude, the U.S. benchmark, rose $1, or 1.4%, to settle at $70.46 a barrel on the New York Mercantile Exchange. It settled at its highest level in a week, but was still down 0.8% from last Friday’s finish for a third consecutive weekly loss. September WTI crude, which became the front-month contract at the session’s end, added 2 cents to finish at $68.26 a barrel. The global benchmark, September Brent crude, settled at $73.07 a barrel, up 49 cents, or 0.7%, on ICE Futures Europe. It marked a weekly loss of about 3% and its third-weekly fall. “Despite the recent weakness and volatility in the energy markets, the longer term trends do still favor the bulls, although the case for WTI is more favorable than Brent on the charts as the latter just hit fresh 3-month lows this week,” Oil saw little change after oil-field services firm Baker Hughes said the number of U.S. oil rigs, a proxy for oil activity, fell by 5 this week to 858. The rig count is up 94 from a year ago, when there 764 rigs.

Mass protests in Iraq’s southern provinces — Thousands took part in mass demonstrations in southern Iraq over the weekend against the intolerable economic conditions that prevail 15 years after the US-led war for regime change that toppled the regime of Saddam Hussein and collapsed the Iraqi state. Iraqi officials have desperately sought to quell the unprecedented protests through a combination of conciliatory rhetoric and state repression, with security forces injuring dozens and killing three demonstrators over the first week. The protests began in Basra City on July 8 when security forces fired on a demonstration of youth protesting lack of employment and essential services, including water and electricity. The Iraqi security forces killed one of the demonstrators, sparking widespread outrage in the community. The demonstrations have continued every day since, with crowds of hundreds of protesters blocking traffic, attempting to seize oil fields and storming and setting fire to government buildings, as well as those belonging to Shia political parties, whom many blame for the lack of any significant improvement in living standards since the fall of the Ba’athist regime. The protests erupting in the mainly Shiite South are directed against the Shiite-dominated, US-backed government. They are driven not by sectarian sentiments, but by class issues. Protesters are calling for an end to pervasive graft, unemployment, and grossly inadequate public services, all of which have become defining features of Iraqi society since the US invasion and occupation. In particular, regular power outages and a lack of clean drinking water make life miserable for the city’s mostly working-class inhabitants during the sweltering summer months. The unreliability of electricity in southern Iraq was exacerbated this year by a drought, which significantly reduced power production at the nation’s hydroelectric dams, and by Iran’s large reduction in the amount of electricity it provides to Iraq as a result of a dispute regarding payment. Basra Province is by far the country’s most oil-rich region. Its oil exports account for 95 percent of annual revenue for the Iraqi government, making its security a key priority for the regime.

Iraq Protesters Storm Airport, Oil Offices Amidst Energy Crisis; Foreign Companies Begin Evacuations – Widespread protests have gripped multiple Iraqi cities for a week in response to government corruption, rising unemployment, and an electricity shortage which has left residents suffocating in soaring summer temperatures. What began as anger over a continued failing infrastructure, however, has increasingly turned into political protests and clashes with police after May 12th parliamentary elections tainted by broad allegations of fraud failed to produce a new government.And now Iraq’s top Shiite cleric, Grand Ayatollah Ali al-Sistani, has weighed in publicly on the side of the protesters, stating they are facing an “extreme lack of public services”. Sistani’s words were issued via live television broadcast during a significant escalation in the Shia hotbed of Najaf on Friday, where hundreds of protesters stormed the city’s international airport, bringing air traffic to a halt. Video showed demonstrators rushing through security barriers while chanting demands, and multiple fires were lit just outside the terminal. Iraqi police appear to have held back, as the protesters numbers were significant – possibly into the thousands according to social media footage – and were able to block key access points to the airport. State TV reported that security was restored and operations resumed as normal by late Friday. Though sporadic protests over the country’s failing electricity grid have been ongoing throughout the summer, last weekend witnessed the first significant clashes with security forces in the southern city of Basra, resulting in an least one death. And this weekend’s clashes appear to be escalating with at least two more deaths reported in Amara, the capital of the Maysan province on the border with Iran.

What’s behind Iraq’s Basra protests? — The protests in Basra have been decades in the making and involve a complex set of factors. Over the last week demonstrators have taken to the streets of Basra, Iraq’s third largest city, protesting unemployment and lack of services. The protests only intensified when Iraqi security forces killed one of the participants. How Prime Minister Haider al-Abadi defuses the crisis will serve as a test for him, as he seeks re-election as a compromise candidate, and will only increase public pressure to expedite the process of forming a new government after the May elections. To understand the latest protests one must read Peter Hartling’s essay “Basra Dystopian City“. My mother used to speak of Basra in its glory days in the 1960s as a thriving urban centre with grandiose homes known as shenasil with wooden facades and ornate hanging balconies overlooking the Shatt Al-Arab waterway. My first trip to Basra as an adult was in 2004 and the city she described did not exist. I saw Hartling’s dystopia, a city devastated by three wars, an uprising, and a decade of sanctions. How did a city once described as Edenbecome this way? Basra served as a frontline metropolis during the Iran-Iraq war, with Iranian offensives – particularly after 1986 – to seize the city, destroying much of its urban fabric. Basra was relatively unscathed during the 2003 invasion, but it suffered during the ensuing decade with rival militias fighting over the city, running kidnapping and extortion rackets, and served as a battleground between these militias and the Iraqi and US military in 2008. Since then the discontent in Basra has been building up. Basra was one of the cities that took part in anti-government protests in the summer of 2015 over corruption in the government, unemployment, and lack of services, particularly salinity in the water, water shortages, and frequent power cuts. Those are the exact same demands articulated over the last week.

Iraq protests: Demonstrators blame ‘bad government, bad roads, bad weather, bad people — “The people want an end to the parties,” chanted protesters, adapting a famous slogan of the Arab Spring, as they stormed the governor’s office and the international airport in the Shia holy city of Najaf.Part of the wave of demonstrations sweeping across central and southern Iraq, they demanded jobs, electricity, water and an end to the mass theft of Iraq’s oil wealth by the political parties.Beginning on 8 July, the protests are the biggest and most prolonged in a country where anti-government action has usually taken the form of armed insurgency.The demonstrations are taking place in the heartlands of the Shia majority, reflecting their outrage at living on top of some of the world’s largest oilfields, but seeing their families barely survive in squalor and poverty.The protests began in Basra, Iraq’s third largest city which is at the centre of 70 per cent of its oil production. A hand-written placard held up by one demonstrator neatly expresses popular frustration. It read:

“2,500,000 barrels daily

Price of each barrel = $70

2,500,000 x $70 = zero !!

Sorry Pythagoras, we are in Basra”

Iraqi police disperse protesters outside Zubair oilfield as unrest grows (Reuters) – Iraqi police wielded batons and rubber hoses to disperse about 250 protesters gathered at the main entrance to the Zubair oilfield near Basra on Tuesday as unrest across southern cities over poor basic services gathered pace. Iraqi policemen threw sand to put out the fire that the protesters had set ablaze, during a protest at the main entrance to the giant Zubair oilfield near Basra, Iraq July 17, 2018. REUTERS/Essam al-Sudani Since demonstrations began nine days ago, protesters have attacked government buildings, branches of political parties and powerful Shi’ite militias and stormed the international airport in the holy city of Najaf. Tensions focused attention on the performance of Prime Minister Haider al-Abadi, who is seeking a second term after May 12 parliamentary elections tainted by allegations of fraud that prompted a recount. In his weekly news conference on Tuesday, Abadi promised to work with protesters to fight corruption and said the government would improve services. Officials and industry sources said the protests have not affected output at Zubair, run by Italy’s Eni, and the other major oilfields including Rumaila developed by BP and West Qurna 2 managed by Lukoil. Many Iraqis believe their leaders do not share the country’s oil wealth. Some demonstrators said foreign laborers were robbing them of employment at oil companies. Three protesters have been killed in clashes with police, including one at West Qurna 2, and dozens wounded. Dozens of policemen were also injured.

‘Desperate to find a way out’: Iran edges towards precipice – In the words of Mohammad, a graphic designer out of work for four months, life in Iran is “like being a fish in a rapidly shrinking puddle of water, under scorching sun in the middle of desert”. On the surface the 28-year-old’s comments speak to the country’s grave environmental challenges: it is experiencing its worst drought in modern history, with water shortages and recurring electricity cuts that cut the internet, halt lifts and disrupt air conditioning in 40C heat. Authorities in Tehran are even considering to bringing working day forward, from 6am to 2pm, to help workers cope. But Mohammad, who relies on his father’s pension for survival, like a “leech feeding on blood” as he puts it, is not speaking about the environment. Instead he is referring to a wider crisis he says has created a sense of hopelessness permeating Iranian society, which few have seen on such a scale since the 1979 Islamic Revolution. A combination of factors ranging from economic grievances and a lack of social and political freedoms to international pressure and sanctions has put the country under unprecedented pressure. Many Iranians would now agree with Mohammad that the country faces a pivotal moment. “People are desperate to find a way out,” he says. “If it’s war, so it be, but quick; if it’s reaching an agreement, so it be, but quick; if it’s regime change, so it be, but quick.” Weeks of sporadic protests across the country over water scarcity, unpaid salaries and currency depreciation, combined with mounting pressure from the Trump administration, which wants all countries to stop buying Iranian oil by 4 November, have piled pressure on Iran’s president, Hassan Rouhani. He is increasingly being seen as a lame duck as he proves unable to fight off hardliners and pursue his agenda. One pledge he has delivered on – the landmark 2015 nuclear deal – is unravelling after Donald Trump pulled the US out of the framework in May.

Throughout Middle East, the Web Is Being Walled Off – – In Egypt, the websites of the Huffington Post and Human Rights Watch aren’t available to most internet users. The Turkish government blocks more than 100,000 sites, including Wikipedia. In Saudi Arabia, a range of news sites linked to rivals Qatar and Iran are off limits. “My first thought was, ‘Welcome to China,’” said a banker in Cairo, recalling his attempt to access Mada Masr, Egypt’s leading independent news organization, which has been blocked since June 2017. He asked to have his name withheld for fear of government reprisal. In recent weeks, Egypt’s Parliament has moved to cement online censorship in law, including legislation passed on Monday that gives the government the right to block social-media users and accounts that engage in any of a number of vaguely-defined violations such as “incitement to break the law.” Authoritarian governments in the Middle East are increasingly adopting a version of China’s approach to online censorship, walling their citizens off from swaths of the internet and denying access to popular websites, often with the aid of Western technology. China has banned Facebook since 2009, two years before social media played an instrumental role in the uprisings of the Arab Spring. As a result, surfing the internet is often a more limited experience than people in the West are used to. Cairo, for example, has more than doubled the number of websites it blocks to an estimated 500 in the past year, according to watchdog groups. And the internet can differ considerably from place to place, depending on the priorities of people in power.“We’re starting to head toward a model where each country has its own version of the internet,” Governments that see potential threats from the internet have long sought to spy on their citizens online, and Middle Eastern regimes have often cut off or slowed down the internet in times of stress. Egypt briefly shut down all internet access during the 2011 revolution that ousted former President Hosni Mubarak. Turkey has blocked and slowed social media repeatedly, including during the crackdown that followed the failed 2016 coup attempt. But as advanced technologies become more widely available on the open market, even countries without a large domestic tech industry are becoming increasingly sophisticated in targeting internet usage. Those technologies include deep packet inspection, which allows authorities to block, monitor, redirect and alter internet traffic, experts say.

Commandos Sans Frontières: The Global Growth of US Special Operations Forces – Early last month, at a tiny military post near the tumbledown town of Jamaame in Somalia, small arms fire began to ring out as mortar shells crashed down. As it happened, Staff Sergeant Alexander Conrad, a member of the U.S. Army’s Special Forces (also known as the Green Berets), was killed. If the story sounds vaguely familiar – combat by U.S. commandos in African wars that America is technically not fighting – it should. Last December, Green Berets operating alongside local forces in Niger killed 11 Islamic State militants in a firefight. Two months earlier, in October, an ambush by an Islamic State terror group in that same country, where few Americans (including members of Congress) even knew U.S. special operators were stationed, left four U.S. soldiers dead – Green Berets among them. (The military firstdescribed that mission as providing “advice and assistance” to local forces, then as a “reconnaissance patrol” as part of a broader “train, advise, and assist” mission, before it was finally exposed as a kill or captureoperation.) Last May, a Navy SEAL was killed and two other U.S. personnel were wounded in a raid in Somalia that the Pentagon described as an “advise, assist, and accompany” mission. And a month earlier, a U.S. commando reportedly killed a member of the Lord’s Resistance Army (LRA), a brutal militia that has terrorized parts of Central Africa for decades. And there had been, as the New York Times noted in March, at least 10 other previously unreported attacks on American troops in West Africa between 2015 and 2017. Little wonder since, for at least five years, as Politicorecently reported, Green Berets, Navy SEALs, and other commandos, operating under a little-understood legal authority known as Section 127e, have been involved in reconnaissance and “direct action” combat raids with African special operators in Somalia, Cameroon, Kenya, Libya, Mali, Mauritania, Niger, and Tunisia. None of this should be surprising, since in Africa and across the rest of the planet America’s Special Operations forces (SOF) are regularlyengaged in a wide-ranging set of missions including special reconnaissance and small-scale offensive actions, unconventional warfare, counterterrorism, hostage rescue, and security force assistance (that is, organizing, training, equipping, and advising foreign troops). And every day, almost everywhere, U.S. commandos are involved in various kinds of training.

It’s Official, “Israel” Is Now A Joint Russian-American Protectorate –Everything that the Western world previously assumed about “Israel’s” supposed “invincibility” has been exposed as a discredited propaganda operation that not even the US is capable of conducting anymore after the on-the-ground facts have disproven its very basis. Long thought of as the “Sparta” of Mideast affairs because of its military’s ability to punch well above its weight in regional conflicts and the efficient capabilities of its intelligence services in catalyzing the MENA-wide Yinon Plan of the so-called “Arab Spring”, “Israel” has now been exposed to have several glaring vulnerabilities that have put it in such a position of weakness vis-à-vis Iran that it’s now compelled to seek joint American and Russian assistance in ensuring its security. During the joint press conference in Helsinki, President Putin proclaimed his long-known desireto protect “Israeli” interests by telling the world that:“I would also like to note that after the terrorists are routed in southwest Syria, in the so-called ‘southern zone’, the situation in the Golan Heights should be brought into full conformity with the 1974 agreement on the disengagement of Israeli and Syrian forces. This will make it possible to bring tranquillity to the Golan Heights and restore the ceasefire between the Syrian Arab Republic and the State of Israel. The President devoted special attention to this issue today.”Trump took it even further by adding that: “We’ve worked with Israel long and hard for many years, many decades. I think that never has any country been closer than we are. President Putin also is helping Israel, and we both spoke with Bibi Netanyahu. And they would like to do certain things with respect to Syria, having to do with the safety of Israel. So, in that respect we absolutely would like to work in order to help Israel, and Israel will be working with us, so both countries would work jointly.

Israel carries out biggest air strikes on Gaza since 2014 war – Israel carried out air strikes against Gaza on Saturday, killing two teenagers and injuring a dozen more people, in what the Israel Defense Forces (IDF) are boasting was their largest bombardment of the tiny Palestinian enclave since the seven-week, 2014 Gaza War. Israeli Prime Minister Benjamin Netanyahu vowed Sunday that the IDF attacks would continue until all missile and “arson attacks” on Israel cease. The first named are small crude rockets built with pipes, the second are Molotov cocktails and flaming kites. Both are rudimentary and ineffective compared to the massive US-supplied arsenal deployed by the Israelis. Going into a cabinet meeting, Netanyahu distanced himself from a ceasefire that Egypt and the UN’s Special Mediator for the Middle East had brokered late Saturday between Israel, Hamas, Gaza’s governing party, and Islamic Jihad, its Iranian-backed ally. Israel, he declared, would not agree “to a ceasefire that would allow the continuation of terrorism by incendiary kites and balloons …We are not prepared to accept any attacks against us.” “Whoever hurts us,” continued Netanyahu, “we will hit them with great strength. This is what we did yesterday. I hope that they got the message; if not, they will get it later.”

Gaza Escalation: 40 Israeli Airstrikes Overnight, Hamas Mortars, Fires In Southern Israel Tensions along the Israel-Gaza Strip border escalated dramatically on Saturday with an intense exchange of fire between Palestinian militants and Israeli security forces, including Israeli air force strikes inside Gaza, which reportedly targeted underground tunnels which Israel says are designed to launch attacks. The Israeli Defense Forces (IDF) cited 31 rockets fired from the Strip overnight to which Israel responded with airstrikes on 40 targets including Hamas’ battalion headquarters, in a flare-up of hostilities officials are calling the biggest attack since Operation Protective Edge in 2014. Amazingly, however, no serious casualties were reported on either side, according to Bloomberg. Hamas, for its part, claimed 15 sites struck withing Israel, saying in an official statement the rocket launches were meant to “force the enemy to stop the escalation.” Both Hamas officials and Palestinian activists say Israeli security has deliberately targeted civilian protesters along the border fence which has left hundreds dead and wounded, which the United Nations is currently investigating.In response, Israel claims the civilian protesters are being deliberately used as human shields – including women and children – ordered by Hamas military officials to go to the front lines where they know they could be shot. Since March, Gaza officials have counted over 140 Gazans killed almost 2000 wounded by Israeli live fire. Israeli military statements further said the significant overnight airstrikes on Hamas positions were in response to a series of arson attacks as well as assaults on Israeli solders.

Israeli forces ‘deliberately killed’ Palestinian paramedic Razan An investigation conducted by Israeli human rights organisation B’Tselem has concluded that Israeli security forces deliberately shot and killed Palestinian paramedics Razan al-Najjar, contradicting the Israeli army’s claims that it was an accident.On June 1, the 20-year-old al-Najjar was shot in the chest with the single bullet, exiting through her back, while she was trying to help wounded demonstrators in Gaza near the perimeter fence with Israel.B’Tselem’s investigation found that a member of the Israeli security forces aimed and shot directly at her as al-Najjar stood some 25 metres away from the fence, “despite the fact that she posed no danger to him or anyone else and was wearing a medical uniform.””Contrary to the many versions offered by the [Israeli] military, the facts of the case lead to only one conclusion,” Amit Gilutz, spokesperson for B’Tselem said.Rami Abu Jazar, 29, a volunteer paramedic from Khan Younis was with al-Najjar when she was fatally shot. In a testimony provided to B’Tselem, Jazar explained that around 6pm that day a group of paramedics approached the fence to evacuate two young men who had fainted due to tear gas inhalation. The paramedics wore medical vests and raised their hands above their heads “to set the soldiers at ease, to make them see we’re paramedics,” Abu Jazar said.

China in the Middle East: Behind Xi’s economic charm offensive —China, the world’s second-largest consumer of crude, has stepped up its investment in the oil-rich Middle East with a pledge of more than $23bn in loans and millions more in aid. President Xi Jinping also wants talks on free trade areas and is putting forward an “oil and gas plus” investment model to representatives of 21 Arab nations at a forum in Beijing. He believes it’s a model that can create jobs and helps safeguard China’s future energy requirements. Xi told Arab leaders that China would like to form a strategic partnership to become “the keeper of peace and stability in the Middle East … and good friends that learn from each other.” The Middle East plays a vital role in the billion-dollar One Belt One Road Initiative, a megaproject that aims to link people in Asia, Africa and Europe via an ultramodern trade route. It is a reinvention of the ancient Silk Road for the modern age. Middle East countries currently provide more than half of China’s crude oil imports and China is the largest trading partner with the region. Its goal is to double its Middle East trade to $600bn by 2020. “This is part of a long-term plan of China to secure its resources for the future,” s”Oil is very important; energy resources for China will be more and more crucial in the coming 10 years, 20 years, 30 years. So, they have already invested in other places like Africa and South America for other resources. But for the oil, the Middle East is the primary area, and the platform that they are conveniently using now is the Belt and Road.”

China Just Doubled Oil Shipments To North Korea – After the recent visits of North Korean leader Kim Jong-un to China, Beijing has almost doubled the volume of crude oil pipeline shipments to North Korea, South Korea’s newspaper Chosun Ilbo reported on Thursday, citing a source in Beijing. The surge in Chinese shipments to North Korea is raising additional concerns that China could undermine the international sanctions against Kim’s regime.Pipeline volumes of between 30,000 tons to 40,000 tons are enough in the summer to keep the pipeline from China to North Korea unclogged, while this volume is around 80,000 tons in the winter, Chosun Ilbo’s source said. Although it’s summer, China has recently increased the oil flow to the winter levels, the source told the South Korean outlet.Under the latest United Nations Security Council sanctions regarding oil sales to North Korea from December 2017, North Korea is allowed to import a maximum aggregate amount of 500,000 barrels of all refined oil products for 12 months beginning on January 1, 2018. The sanctions also introduced a limit of 4 million barrels – or 525,000 tons – per a twelve-month period as of 22 December 2017 for the supply, sale, or transfer of crude oil to North Korea.If China sends 80,000 tons of oil to North Korea every month, this volume already brings the amount to 960,000 tons a year – above the 525,000 tons limit for a 12-month period in the sanctions, Chosun Ilbo argues.Citing a confidential U.S. report to the UN sanctions committee, the AFP reported last week that the United States asked the UN Security Council to impose an immediate stop to all shipments of refined oil products to North Korea, after finding that Kim Jong-un’s regime had vastly exceeded the UN-restricted quota for oil product imports.According to the U.S. report to the UN, North Korea received at least 759,793 barrels of oil products between January 1 and May 30, well above the 500,000-barrel annual quota. The supplies have been made via ship-to-ship transfers with North Korean tankers that have called in port at least 89 times, the United States says. The United States also accused China and Russia for keeping oil sales to North Korea.