Written by rjs, MarketWatch 666
Here are some more selected news articles about the oil and gas industry from the week ended 28 July 2018. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening.
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This Civilization is Collective Murder-Suicide – The end point for everything the extreme energy civilization is doing: The Earth nothing but a desert with ruins. Civilization is destruction. For humanity and the Earth it is death. We’re bogged down in it. It’s driving us to the brink of nuclear war at the same time it’s giving us all cancer. Most civilized people want the missiles to fly, and most want cancer for themselves and their children. Their actions prove it.“Growth”, the idol of fundamentalist worship by all the civilized, including “environmentalists” and the climate crocodiles, is physically unsustainable and must collapse with unfathomable consequences. It is cancer as well. Symbolically growth is directly analogous to cancer metastasis, and growth’s reality depends upon physically killing us with cancer, starvation, bullets.Look everywhere Western globalization has spread, look at any government, any Leader, any journalist, any academic, any NGO, see what they unanimously say: If you’re not rich, then die.It is self-evident that anyone who thinks this way also will think murderously, though few are as honest as the Canadian bankster who openly says, “There are some people that are going to die in protesting construction of this pipeline.” What this means is, “We should kill anyone who is in the way of our tyranny, whether as activists or simply as obstacles.” This means the entire 99%. All system cadres think this way and intend to act on this. This is the intended consummation of modern civilization, the total murder of the Earth and murder-suicide of humanity. Smash the bottlenecks.
Permitting problems put brakes on key U.S.-Canadian transportation projects – Degraded infrastructure, unsteady political support for financing transportation projects and regulatory differences between American states and Canadian provinces dominated discussion Monday during the transportation sessions at the Pacific Northwest Economic Region’s annual summit being held in Spokane. Spanning any ideological divide among the governmental and private sector participants, however, was the push to simplify the permitting process for large-scale infrastructure projects. Zak Andersen, an executive at BNSF Railways, said the process that gives permission to build those projects, such as the $680 million Millennium Bulk Terminals-Longview project, has been “hijacked.” Washington state rejected permits for the coal terminal, citing “significant and unavoidable harm” to the environment, after a lengthy and heated public process. “Where the system has gone awry, it’s become too easy to hijack the process,” he said, referring to special interest groups that he characterized as having outsized influence. He said the scope of the coal project in the state’s definition stretched from Longview “to the coal mines of Wyoming.” Andersen, whose company has joined a lawsuit opposing the state’s decision, said defining a project’s scope in such a way allows for “the worrying of things that seem beyond what the project is being permitted for.” “It makes building anything impossible,” he said. “It’s becoming a long, drawn-out process simply due to inertia. You folks need to get off the bench.”
Canada to Miss Deadline for Quickly Reselling Trans Mountain Pipeline – About a dozen parties are interested in the Trans Mountain oil pipeline, but the Canadian government won’t reach a deal to flip it before a marketing deadline with Kinder Morgan Inc. closes Sunday, according to people familiar with the situation. The government’s C$4.5 billion ($3.4 billion) purchase of the pipeline and expansion project gave it to July 22 to co-market the pipeline with an eye to selling it to a third party. A quick sale would have effectively allowed the government to substitute in another buyer for the current deal to be finalized. That deadline Sunday is set to pass. The deal will be finalized with the government as the new owner, and it will seek a new buyer without Kinder Morgan’s help, amid fears of legal and political delays. About a dozen parties have signed non-disclosure agreements as part of the process for a potential resale, and the project is seen likely to end up being bought by a Canadian-led consortium, as opposed to a single buyer, the people said. The Trans Mountain sale is scheduled to close in either the late third quarter or early fourth quarter, as the project faces continued opposition from the British Columbia premier and awaits a key court ruling. Kinder Morgan’s Canadian unit declined to comment beyond previous statements that it is working with the government to find a buyer, and it referred questions on the status of those efforts to the government. A spokesman for Finance Minister Bill Morneau declined to directly say if there’d be a sale to a third party by July 22, but said the government won’t hold the pipeline forever. Finding a third-party purchaser by the Sunday deadline would be difficult because the obstacles that Kinder Morgan cited in its threat to abandon the project still exist, said Kevin McSweeney, a fund manager at CI Investments in Toronto. British Columbia has given no indication it will drop efforts to impose additional regulations on the pipeline, and a court case over the project is still under way, he said. Third-party purchasers are likely to be attracted to the pipeline once those issues are resolved, he said.
With Trump Going Soft on Nord Stream, Congress Moves to Kill the Pipeline – After U.S. President Donald Trump’s embrace of Russia at the Helsinki summit, lawmakers in the U.S. Congress are again putting Moscow’s huge and controversial European energy project in the crosshairs, rolling out a new slate of sanctions that could kill the Nord Stream 2 pipeline and boost U.S. energy exports to Europe. Tougher U.S. sanctions on the $11 billion natural gas pipeline from Russia to Germany across the Baltic Sea, are about the only thing that could kill the project at this point. What’s less clear is whether U.S. natural gas will be able to make up the difference – and whether Europe wants or needs Washington’s help in managing its own energy security. On Wednesday, Republican Sens. John Barrasso and Cory Gardner introduced a bill that would make mandatory U.S. economic sanctions on companies building the Nord Stream pipeline. Last year, Congress passed tough potential sanctions on Russian energy projects, but the new bill would make them explicitly applicable to Nord Stream and mandatory, rather than leaving them to the president’s discretion. The bill also seeks to streamline the export of more U.S. natural gas to allies such as Japan and members of NATO. Barrasso has been trying to boost U.S. energy exports to allies for years and has been a vocal critic of Nord Stream 2. But energy analysts viewed the introduction of the new bill as a timely response to Trump’s softer language on the Russian energy project in his meeting with Russian President Vladimir Putin in Helsinki on Monday. The United States has been railing for years against big Russian pipeline projects, including Nord Stream 2, that could redouble the European Union’s reliance on Moscow for energy, thus handing Russia potential leverage over the continent’s economic lifeblood. But by promoting U.S. energy exports as a replacement for Nord Stream 2, Washington is sending the wrong message on Russian energy coercion, said Brenda Shaffer, an energy expert at Georgetown University. “Linking U.S. gas exports to anti-Nord Stream 2 legislation undermines the U.S. position against the pipeline,” she said, because it “reinforces Moscow’s claim that the U.S. is acting out of self-interest, despite that not being the case.”
US bill against Nord Stream 2 natural gas pipeline ‘absurd’ — Russian energy minister Alexander Novak Friday described a US bill introduced by senator John Barasso, Republican-Wyoming, that would impose mandatory sanctions against the Nord Stream 2 pipeline as “absurd”. “This is, in my opinion an absurd bill that offsets all market rules,” Novak told journalists. Speculation is growing about the fate of the Nord Stream 2 project, which would double Nord Stream’s capacity and allow for shipments of up to 110 Bcm/year of Russian gas. The project has divided opinion in Europe, with some including the European Commission and many countries in Eastern Europe opposing the project on the grounds that it will increase Europe’s dependence on Russian gas. It has not been blocked yet, however, and five European companies continue to invest in it.
Natural gas storage injections slump in NW Europe on Nord Stream pipeline flow suspension — Injections into natural gas storage facilities in northwest Europe dropped significantly with the start of two weeks of maintenance on the key Nord Stream gas pipeline from Russia to Germany, an analysis by S&P Global Platts showed Friday. Nord Stream — which recently flowed at its maximum capacity of 158 million cu m/d — was closed Tuesday for annual maintenance. The outage has left the northwest European market short of a significant chunk of supply amid strong demand for storage restocking and in the power sector. The slump in storage injections in the region comes at a time when inventories are already lagging 1.1 Bcm behind the 23 Bcm recorded a year ago and this could put pressure on supply and prices next Winter. Nord Stream flows drop offset by storage and Yamal Net storage injections fell week on week to just 131 million cu m/d on Tuesday, the first day of the Nord Stream maintenance, compared with an average of 175 million cu m/d in the week July 9-13, according to data from S&P Global Platts Analytics.
Europe to become ‘massive’ buyer of US LNG, Trump says — Europe will build more terminals to import US liquefied natural gas, the head of the European Commission told US President Donald Trump during a meeting aimed at averting a transatlantic trade war. “They want very much to do that, and we have plenty of it,” Trump said, referring to the US shale boom, which has unleashed record supplies of the heating and power-plant fuel. “They will be a massive buyer, and they will be able to diversify their energy supply.” Imports to Europe are poised to rise almost 20% by 2040 from 2016 levels, according to International Energy Agency. While Russia has long been the region’s top supplier, it’s now facing significant challenges from both the US and Qatar, rivals with vast natural gas reserves. Trump and the Commission president, Jean-Claude Juncker, spoke to the media after meeting at the White House. The comments quickly sparked investor reaction for both Cheniere Energy, America’s largest exporter of LNG, and Tellurian, which is working to get its export project in Louisiana approved. The comments come as at least four new US LNG export projects are slated to start up by 2020. Since early 2016, the US has shipped 41 cargoes of LNG to Europe, according to ship tracking data compiled by Bloomberg. That’s about 10% of US LNG exports. Europe is looking to step up gas imports with its largest production field in the Netherlands slated to shut and France moves toward shutting nuclear power plants. After Cheniere began shipping gas two years ago from its Sabine Pass terminal in Louisiana — the first to send shale output abroad — the US became a net exporter of the fuel for the first time since the 1950s. This year, Dominion Energy opened the first export facility on the East Coast, providing a quicker route to European buyers. Many of the continent’s buyers, particularly in Eastern Europe, are eager for alternatives to Russian supply. Gas flow to Europe was disrupted twice, in 2006 and 2009, over a pricing dispute between Russia and Ukraine. Meanwhile, Lithuania and Poland have built terminals to import cargoes of liquefied natural gas from overseas, reducing their reliance on Russia. But Russia relies on gas exports for its budget revenue and Europe is its biggest customer, meaning the nation will “protect its turf at all costs,” Manas Satapathy, a MD for energy at Accenture Strategy, said in a telephone interview.
EU to build more terminals to import US LNG — The European Union plans to import more liquefied natural gas (LNG) from the US to diversify its energy supply. European Commission President Jean-Claude Juncker said more terminals will be built in the region during his visit to the White House this week. He met with President Donald Trump yesterday to launch a new phase in the relationship between the US and the EU, including strengthening their co-operation on energy. Mr Juncker said: “We have decided to strengthen our co-operation on energy. The European Union will build more terminals to import liquefied natural gas from the US. This is also a message for others. We agree to establish a dialogue on standards. And we also agree to work on the reform of the WTO [World Trade Organisation]. This of course if based on the understanding that, as long as we are negotiating, unless one party would stop the negotiations, we hold off further tariffs and we reassess existing tariffs on steel and aluminium.”
Lean EIA Storage Data Expected as August Natural Gas Called Higher – August natural gas futures were set to open Thursday about 0.7 cents higher at around $2.782/MMBtu, with the market turning its attention to upcoming weekly Energy Information Administration (EIA) storage data that could once again show a below-average injection.Estimates for the report, set to release at 10:30 a.m. ET, point to a lean build that would grow the year-on-five-year deficit for the third straight week, as summer heat has kept stockpiles in check despite record-level production.A Bloomberg survey showed traders and analysts expecting a median 36 Bcf injection for the week ended July 20, with a range of 28 Bcf to 52 Bcf. IAF Advisors analyst Kyle Cooper called for a 30 Bcf injection, while Intercontinental Exchange EIA Financial Weekly Index futures settled Wednesday at an injection of 25 Bcf.Last year, EIA recorded a 19 Bcf injection, while the five-year average is a build of 46 Bcf. Last week’s report covering the week ended July 13 missed to the bullish side of estimates at 46 Bcf, widening the stubborn year-on-five-year deficit to well over 500 Bcf.In recent weeks, the market has shown a tendency to shrug off the weekly storage number, with prices sometimes rising on a seemingly bearish report or falling when injections have missed to the low side, EBW Analytics Group CEO Andy Weissman said. “This week seems to be different,” he said. “Natural gas futures surged Wednesday, largely in response to the potential that today’s reported injection might be below 30 Bcf. The consensus forecast is for a reported injection of 35-36 Bcf this morning. A number of well respected prognosticators, however, are predicting injections between 23 Bcf and 30 Bcf.
US natural gas storage increases 24 Bcf to 2.273 Tcf: EIA – US natural gas in storage increased by 24 Bcf to 2.273 Tcf for the week ended July 20, the US Energy Information Administration reported Thursday. The build was much less than an S&P Global Platts’ survey of analysts calling for a 35 Bcf addition.The injection was more than the 19 Bcf build reported during the corresponding week in 2017 but well below the five-year average addition of 46 Bcf, according to EIA data.As a result, stocks were 705 Bcf, or 24%, less than the year-ago level of 2.978 Tcf and 557 Bcf, or 20%, less than the five-year average of 2.784 Tcf.The injection was smaller than the 46 Bcf build reported the week prior as gas-fired power generation jumped to year-to-date highs across Texas, the Southeast and the Midwest, according to data from S&P Global Platts Analytics.Small dips from onshore production in the Southeast and Texas also provided further downward pressure to this week’s estimate.Despite the bullish build, NYMEX August Henry Hub natural gas futures only inched up 1 cent to $2.78/MMBtu following the 10:30 am EDT storage announcement.The EIA reported a 20 Bcf injection in the East to 527 Bcf, compared with 624 Bcf a year ago; a 23 Bcf build in the Midwest to 524 Bcf, compared with 742 Bcf a year ago; a 1 Bcf addition in the Mountain region to 145 Bcf, compared with 197 Bcf a year ago; a 2 Bcf withdrawal in the Pacific to 257 Bcf, compared to 294 Bcf a year ago; and an 18 Bcf pull in the South Central region to 820 Bcf, compared to 1.122 Tcf a year ago. Total inventories are now 103 Bcf less than the five-year average of 630 Bcf in the East, 162 Bcf less than the five-year average of 686 Bcf in the Midwest, 29 Bcf less than the five-year average of 174 Bcf in the Mountain region, 54 Bcf less than the five-year average of 311 Bcf in the Pacific, and 208 Bcf less than the five-year average of 1.025 Tcf in the South Central region.
Another Bullish Miss in EIA Storage Report Leads to Modest Rally – Another bullish miss on Thursday from the Energy Information Administration’s (EIA) weekly natural gas storage report failed to spark much of a rally as the market continues to count on production replenishing stockpiles once summer heat subsides.EIA reported a 24 Bcf injection into Lower 48 gas stocks for the week ended July 20, lower than most estimates and well below the five-year average 46 Bcf. Last year, EIA recorded a 19 Bcf injection. Last week’s EIA report covering the week ended July 13 also missed to the bullish side of estimates at 46 Bcf, as surging production has kept a lid on prices but can’t seem to shrink deficits. Wednesday’s 4.3 cent rally for the front month suggested the market was anticipating a tight EIA report, which may help explain why the immediate price response Thursday was muted. When the number was published at 10:30 a.m. ET, the August Nymex contract picked up about 2.0 cents to trade up around $2.790. By 11 a.m. ET, August was trading around $2.794, up about 1.9 cents from Wednesday’s settle. September, set to take over as the prompt month once August expires Friday, was trading around $2.776, up about 2.1 cents from Wednesday’s settle.Prior to the report, consensus estimates had the market looking for a build about 10 Bcf higher than the actual figure. A Bloomberg survey had produced a median 36 Bcf injection, with a range of 28 Bcf to 52 Bcf. Intercontinental Exchange EIA Financial Weekly Index futures came closer to the mark, settling Wednesday at an injection of 25 Bcf.Bespoke Weather Services said the figure came in about 9 Bcf below its estimate, largely because of a “massive draw” reported for the South Central region. “We had been looking for a small implicit revision from last week’s very tight print, but instead today’s print seemed to confirm last week,”
Japan June LNG imports fall 10.3% to hit 5.55 million mt, lowest since May 2016 – Japan’s LNG imports dropped 10.3% year on year in June, hitting the lowest monthly volume in almost two years as supply from major producing countries such as Australia, Qatar and Malaysia fell, data from the Ministry of Finance showed Friday. June’s imports came in at 5.55 million mt, the lowest since May 2016’s 5.52 million mt. Australia sent 1.68 million mt of LNG, 29.6% less than a year earlier. Qatari imports fell 13.2% year on year to 756,846 mt while Malaysia supplied 677,337 mt, down 24.3%. Globally, supply shrank in the second quarter due to unplanned countenances in Qatar, Malaysia and Brunei combined with a natural disaster in Papua New Guinea, according to S&P Global Platts Analytics. Imports from Papua New Guinea have been recovering after the country was hit by a massive earthquake in late February. PNG volume rose 32.5% to 208,788 mt from May, but was still down 22.6% from a year earlier. Japan imported 180,313 mt of LNG from the US. According to S&P Global Platts ship-tracking software cFlow, the Golar Glacier and Maran Gas Alexandria delivered cargoes from Cove Point LNG to the Ohgishima terminal on June 6 and June 14, respectively. The Maria Energy also delivered a cargo from Sabine Pass to Japan’s Himeji terminal on June 14, according to cFlow. The Japan Customs Cleared crude oil price was $76.344/b in June, rising 8.1% from May and soaring 46.2% year on year. Japan’s long-term LNG contracts are often linked to the JCC crude price, but with a lag of a few months, so fluctuations in oil prices typically take some time to feed through into LNG prices.
Global Oil Discoveries See Remarkable Recovery In 2018 – Global discoveries of conventional oil and natural gas are seeing an exciting recovery with discovered resources already surpassing 4.5 billion boe in H1 2018, Rystad Energy analysis shows. The average monthly discovered volumes YTD are estimated at 826 million boe, up approximately 30% compared to 625 million boe in 2017. During H1 2018, Guyana led the top five countries in terms of total discovered resources added followed by the United States, Cyprus, Oman and Norway. These five countries hold three-fourths of the total resources discovered this year. The discoveries in Guyana, the United States and Cyprus are located in ultra-deepwater and are 100% owned by oil majors, indicating indicates that oil majors have started to re-focus on deepwater exploration.The biggest offshore discovery to date this year is believed to be the Eni-operated Calypso gas find offshore Cyprus, while the largest onshore discovery, a gas-condensate find, was reported on the Mabrouk North East prospect, operated by Petroleum Development Oman. ExxonMobil’s spate of oil discoveries continue in Stabroek block with three major oil discoveries reported in 2018 – Ranger, Pacora and Longtail, which together could hold almost 1 billion barrels of oil or more. These finds followed previous major discoveries on the block at Liza, Payara, Snoek and Turbot.The United States reported oil discoveries at Ballymore and Dover prospects in the Norphlet play in deepwater Gulf of Mexico. The Norphlet play, which is characterized by high-pressure, high-temperature (HPHT) conditions accompanied with complicated and elusive structures revealed to be fortunate for Chevron and a prevailing success for Shell. Chevron discovered a significant oil play at the Ballymore prospect with its first exploration well in the subtle play whereas the Dover discovery located 13 miles from the Appomattox host was Shell’s sixth discovery in the play. Related: Strong Dollar Could Cap Oil PricesCyprus marked its entry in the list owing to Eni’s promising gas discovery at Calypso 1 NFW ultra-deepwater well in Block 6. The discovery well encountered an extended gas column in rocks of Miocene and Cretaceous age, confirming the extension of “Zohr-like” play in the Cyprus Exclusive Economic Zone.
Global oil industry prepares for a revival – Oil producers are ordering more equipment and lining up drilling rigs for later this year, according to top industry executives, indications that international activity is picking up. The chief executives of Schlumberger Ltd. and Baker Hughes , owned in part by General Electric Co. , said customers are moving forward with large projects and even preparing to increase exploration for future ones. “The international recovery has finally started,” Schlumberger Chief Executive Paal Kibsgaard said during the company’s earnings call with analysts. “The backlog on integrated drilling projects is the most we’ve ever seen.” Over the past year, global oil activity has divided into two distinct stories. The U.S. has remained a bright spot for the oil industry, as frackers have withstood sustained low oil prices following a crash in 2014. Earlier this month, U.S. oil output hit 11 million barrels a day for the first time ever, according to federal estimates. Outside of the U.S., major oil conglomerates and national oil companies have pulled back production and stopped investing in costly offshore projects. .Oil prices reached 3 ½-year highs earlier this year, as Brent crude, the global benchmark, topped $80 a barrel. Prices have fallen a bit in recent weeks following a June OPEC meeting at which the cartel and Russia agreed to ramp up production by up to one million barrels a day, but have stayed above $70 since April. Baker Hughes CEO Lorenzo Simonelli said higher commodity prices are creating a good climate for renewed investment in oil production and exploration. “People are starting to firm up their plans for next year and you are starting to hear more about [spending] increases and projects moving forward,” Mr. Simonelli said. The international rig count is flat so far this year, but that may be starting to change. Mr. Kibsgaard said the company was mobilizing 90 land rigs outside the U.S. jointly with third-party drillers, which he called “unprecedented.” In another sign of global activity heating up, Baker Hughes said it had its largest number of orders for oil-field equipment since 2015. The uptick in activity comes as concerns over supply grow because of instability at some of the world’s biggest oil producers and geopolitical concerns. There have been large supply outages in Venezuela and Libya, and renewed U.S. sanctions pose a risk to supply in Iran.
Profits For Oil Majors Soar Even As Wall Street Hoped For More – It was mostly a quiet week for oil prices, rising on the back of geopolitical tensions at the start of the week before losing those gains on Friday as the oil rig count increased. Earnings reports started trickling in this week, with strong performances across the board. The recovery of oil markets in the last year is starting to be reflected in earnings, although some share prices were battered as Wall Street had expected more. Royal Dutch Shell nearly tripled its profits in the second quarter, year-on-year, and announced the beginning of a $25 billion share buyback program. Investors weren’t convinced, and Shell’s stock sunk nearly 4 percent on the news. The skepticism may have been the result of the 1.5 percent decline in production, which stemmed from field declines and asset sales. Also, Shell’s earnings came in a little under expectations. Shell’s gearing, or debt ratio to capitalization, declined from 24.7 percent in the first quarter to 23.6 percent in the second, another sign of progress. . BP agreed to purchase BHP’s shale assets for $10.5 billion. BHP has been trying to unload its shale assets for a while, after losing some $19 billion on shale, so the sale is welcome. For BP, the acquisition is an enormous splash, making it a major player in U.S. shale. The assets are located in the Eagle Ford, Permian and Haynesville shales. “This is a transformational acquisition for our (onshore U.S.) business, a major step in delivering our upstream strategy and a world-class addition to BP’s distinctive portfolio,” BP Chief Executive Bob Dudley said in a statement. BP also hiked its dividend for the first time in almost four years and also announced a $6 billion share buyback. Chevron reported earnings of $3.8 billion for the second quarter, more than twice as much as a year earlier. Like some of the others, earnings still came in a bit under expectations – shares were down 2 percent on the news. Meanwhile, ExxonMobil (NYSE: XOM) fell 4 percent in early trading on Friday after undershooting expectations. The oil major said that production fell 7 percent in the second quarter, year-on-year, even as Permian and Bakken production jumped. Exxon earned just under $4 billion for the quarter, up 18 percent from a year earlier.
In China’s far west, CNPC vows $22 billion spend to replace ageing oil wells (Reuters) – China National Petroleum Corp (CNPC) said on Wednesday it will spend more than 150 billion yuan ($22 billion) by 2020 to boost oil and gas production in the western region of Xinjiang, aiming to offset falling output from ageing fields in northeast China. The increased spending will push output in the Xinjiang Autonomous Region to more than 50 million tonnes of oil equivalent between 2018 and 2020, CNPC said. The investment is equivalent to the total expenditure by CNPC’s listed unit PetroChina, China’s top oil and gas producer, for oil and gas exploration and production in 2017. CNPC’s Xinjiang operations churned out 11.45 million tonnes of crude oil last year, while the company produced 23.5 billion cubic meters of gas, equivalent to 17.1 million tonnes of gas, from the Tarim in the region, one of China’s largest gas basins, according to PetroChina’s 2017 annual report. Based on these figures, the new investment would boost output from the region by at least 75 percent by 2020. The spending spree underscores the need to replace output from the Daqing oilfield in the northeastern province of Heilongjiang as well as a push to increase the country’s natural gas output to meet growing demand for the fuel as part of Beijing’s shift away from coal. Beijing also wants to increase development in the unruly Xinjiang region, which borders Central Asia, where hundreds have died in ethnic unrest in recent years. “A portion of the money would be spent on the logistics, storage tanks, and also downstream gas infrastructure for the southern part of Xinjiang to use natural gas for environmental reasons.” The boost is unlikely to affect import demand from the world’s top crude importer because new output will replace lost capacity elsewhere. Still, it reflects the company’s growing confidence after a surge this year in the price of crude oil. State oil majors have also grabbed a bigger share of the lucrative fuel export market as smaller independent refiners struggle with tough new taxes and an environmental crackdown.
China data: Commercial crude stocks unlikely see further build in H2 – China is unlikely to build its commercial stocks of crude oil in the second half of 2018 as refiners prefer to keep their inventory low for daily operation amid price volatility, analysts said last week. “Chinese refiners would like to build up crude oil stocks when oil prices are rising, which helps them lift their refining margins. Currently, however, oil prices are unlikely to rise further and cross $80/b, given the strong dollar, which discourages refiners from building their stocks,” a Beijing-based analyst said. Chinese refiners normally process crude oil barrels that they fixed 1-2 months ahead, while the domestic price of oil products are set based on the movement of a basket of international crude prices in the previous 10 working days. The pricing mechanism for crude oil and oil products determine that refiners earn more when crude prices are rising as they can buy feedstock low and sell products at a high price. International crude prices have been on an uptrend since June 22, 2017, with ICE Brent hitting a multi-year high of $80.49/b on May 22 this year. But since then, the benchmark has fluctuated but stayed below $80/b. Moreover, due to a depreciating yuan, the cost of holding stocks was rising, a Singapore-based analyst said. The yuan fell sharply to one-year low of Yuan 6.767 against the dollar at 4:30 pm Singapore time on Friday from 6.2771 on April 17. Most Chinese refiners do not hedge against foreign exchange risk.
Germany Encourages India To Keep Buying Oil From Iran – Germany’s minister of state for foreign affairs has encouraged India to continue buying Iranian oil, despite pressure from the United States, which Niels Annen called “irritating, to put it mildly.” “I am not a salesman for Iran but I have an impression that India is willing to continue buying oil from Iran and this will be a very important statement,” Annen told Indian media, as quoted by Sputnik, also noting that whatever New Delhi decided, it would be a sovereign decision. India is Iran’s top oil client, and it is also one of the countries that are most heavily dependent on oil imports. This means that the consequences of U.S. sanctions on Tehran will spread to India, which already has a problem with too high international oil prices. India is a strong U.S. ally in Asia, but it has also been building better relations with Tehran, which puts it in a sensitive position. In May, when President Trump announced that the United States would pull out of the Joint Comprehensive Plan of Action, more commonly known as the Iran nuclear deal, India’s Foreign Minister said that India will continue importing Iranian crude despite U.S. sanctions, adding that that India only honors sanctions imposed by the United Nations, but not ones introduced by individual countries. Nevertheless, Iranian crude oil imports into India fell by 15.9 percent in June from May, or to 592,800 bpd from more than 705,000 bpd in the previous month. The drop suggests that despite its initially tough stance on U.S. sanctions, Indian refiners have started changing their mind as the November 4 deadline to wind down business relations with Iran draws nearer. An Iranian official from the embassy in New Delhi then threatened India that it might lose its “special privileges” if it stops buying Iranian crude in November. Other Tehran officials were quick to call the threat a misquote, and went on to assure India that Iran will continue to ensure a stable supply of crude for its regional partner.
Can Iran Circumvent U.S. Sanctions? – On August 6th, the first batch of sanctions against the Islamic Republic will go into effect. This includes sanctions on the acquisition of US dollar banknotes by Iran’s government, sanctions on its trade in gold and other precious metals, sanctions on sales and transfer of aluminum, steel, coal, and graphite, and sanctions on Iran’s automotive sector. However, the second set of sanctions of November 4th will hit the crucial energy and banking sector. With the announcement of the re-installation of sanctions by President Donald Trump, Iran is in a unique position. Although the threat of sanctions is hanging over the country like the Sword of Damocles, Tehran is in a relatively comfortable position internationally to withstand pressure from Washington as the other signatories of the JCPOA remain supportive. Germany, France, and the UK have promised to soften the pain for Iran in order to keep the country in the nuclear agreement. In recent announcements, the current U.S. administration said that it intended to hit Tehran where it hurts by bringing their oil exports to virtually zero. However, the potential risk of a price explosion globally due to decreasing production in other regions such as Venezuela, Nigeria, and Libya, has somewhat softened Washington’s approach. Waivers could be provided to some importers. For now the current regime has restricted itself to mere threats and announcements, but as domestic pressure from hardliners continues to rise, Iranian President Hassan Rouhani could soon be forced to reinvigorate the nuclear program. Iranian officials have already been ordered to start preparations to deploy machines for advanced nuclear enrichment, putting pressure on European states to provide incentives to keep the Islamic Republic in the nuclear accord. The first sign of the French, British and German governments falling through on their promise, came in the week of 16 July. Iran was told by the European powers that they are investigating activating accounts for the Iranian central banks with their national central banks in a bid to open a financial channel for Iran to continue its economic activities in euro, sterling, and other denominated accounts, thus bypassing the dollar. This is significant as companies could be restricted in their access to the dollar as a consequence of continuing business in Iran. Furthermore, Washington intends to impose secondary sanctions on firms dealing with Iran, meaning that companies which are active in both countries will face sanctions in the U.S.
Trump’s Twitter War with Iran Spotlights Vital Oil Route – The war of words between U.S. President Donald Trump and his counterpart in Iran over oil exports and sanctions is shining a spotlight on the narrow, twisting conduit for about 30 percent of the world’s seaborne-traded crude. The Middle East’s biggest oil exporters rely on the Strait of Hormuz, the passage linking the Persian Gulf with global waterways, for the vast majority of their crude shipments — some 17.5 million barrels a day. Should a regional conflict block that bottleneck, three of the largest Gulf Arab crude producers have pipeline networks that would potentially enable them to export as much as 4.1 million barrels via alternative outlets, according to Bloomberg calculations. Even so, this amount of oil, if sent by pipeline, would be less than a quarter of the total that typically sails on tankers through Hormuz. Iran has renewed threats to block the Strait since the U.S. announced its plan to reimpose sanctions and cut shipments from OPEC’s third-largest producer to zero from about 2.5 million barrels a day now. The U.S. president warned Iranian President Hassan Rouhani to “never, ever threaten the United States.” Trump’s tweet came hours after Rouhani warned the U.S. against endangering Iranian oil exports and called for improved relations with neighbors, including rival Saudi Arabia. Saudi Arabia and the United Arab Emirates, two of America’s closest friends in the Middle East and geopolitical adversaries of Iran, both have pipeline networks that bypass Hormuz. Iraq has one operational pipeline to a Turkish port on the Mediterranean Sea. All four countries are members of the Organization of Petroleum Exporting Countries and depend on the Strait to export their oil. The total capacity of pipelines that could be used instead of Hormuz is about 7.1 million barrels a day, though some of that capacity is currently taken up by oil sent to export markets or domestic refineries. Saudi Arabia and Abu Dhabi, the capital of the U.A.E., are each using less than half of the respective pipeline capacities, while a link from northern Iraq is about two-thirds utilized, Bloomberg data show. “Actual export capacity that avoids the Strait is limited,”
Khamenei backs threat to stop Gulf exports if oil sales halted –Iran’s Supreme Leader Ayatollah Ali Khamenei has supported a suggestion by President Hassan Rouhani who hinted earlier this month that Tehran may block regional oil exports if its own sales are stopped following the US’ withdrawal from a 2015 nuclear deal with world powers. Rouhani’s apparent warning on July 3 that Iran may disrupt oil shipments from neighbouring countries came in reaction to looming US sanctions and efforts by the administration of President Donald Trump to force all countries to halt purchases of Iranian oil.Even though Rouhani did not mention the Strait of Hormuz, his comments were nonetheless seen as a threat to the narrow strategic passageway located between Iran and Oman, through which at least 18.5m barrels of oil moved every day in 2016, according to a US energy department report.The strait is not only used by Iranian ships, but also by Gulf countries who rely on safe passage through the narrow chokepoint to export their oil and gas. “Remarks by the president … that ‘if Iran’s oil is not exported, no regional country’s oil will be exported,’ were important remarks that reflect the policy and the approach of [Iran’s] system,” Khamenei’s official website quoted him as saying on Saturday.He went on to describe Rouhani’s remarks as “important”, adding that they “reflect the policy and the approach of [Iran’s] system”.The comments come as the US demands that all countries end imports of Iranian oil by November 4 as part of its new policy towards Tehran after Washington unilaterally pulled out of the Joint Comprehensive Plan of Action (JCPOA), known colloquially as the Iran nuclear deal.
If Iran’s oil export is blocked, no other country in region will export oil either: Imam Khamenei – The Foreign Minister, staff and officials of the Ministry of Foreign Affairs as well as Iranian ambassadors and senior diplomats serving abroad met with the Leader of the Islamic Revolution – Ayatollah Khamenei – this morning [Saturday] July 21, 2018. At this meeting, the Leader of the Islamic Revolution described the assumption that the country’s problems can be solved by negotiations or relationship with the U.S. ‘an evident mistake’ and added: “The U.S. has fundamental issues with the essence of the Islamic establishment. Moreover, many countries in Africa, Asia or Latin America have relations with the U.S., and yet they are facing plenty of problems.” Referring to the deeply-rooted hostility the U.S. practices against the Islamic Republic, Ayatollah Khamenei reiterated: “The American officials seek the position and status they once enjoyed in Iran before the 1979 Islamic Revolution and they will not be content with less than that.” He regarded the United States’ opposition to the nuclear capability, high enrichment power, and the presence of Iran in the region, as a result of their deep animosity against the Islamic Republic’s elements of sovereignty, adding: “The presence of Iran in the region reassures power and security of Iran, and is part of the strategic backdrop of the country; that is why the enemies oppose it.” The leader of the Islamic Revolution referred to the repeated mention of unreliability of the US by Iranian officials and stated: “I have always been insisting that we cannot trust the words or even signatures of the U.S. authorities. Hence, negotiating with the US is useless.”
Trump’s war of words with Iran raises real world risks for oil markets –The threat of military conflict between the United States and Iran is rising, threatening to shut the world’s busiest seaway for oil exports and send crude prices higher, analysts told CNBC on Monday. President Donald Trump on Sunday night warned Iranian PresidentHassan Rouhani on Twitter that his country would “SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE” if Rouhani ever threatened the United States again. Trump appeared to be responding to comments over the weekend from Rouhani, who said, “Iran’s power is deterrent and we have no fight or war with anybody but the enemies must understand well that war with Iran is the mother of all wars,” according to an English translation on the Iranian president’s official website.Oil prices jumped by about $1 per barrel on Monday following the back-and-forth, but ultimately pulled back to end the day roughly flat. “I think the market’s a little complacent,” said Bob McNally, founder and president of energy consultancy The Rapidan Group. “Maybe they’re thinking this is a repeat of North Korea. The president will tweet about fire and fury and before you know it, the president and President Rouhani will be in Geneva having a meeting and talking about a deal.” On Monday, Trump’s national security advisor, John Bolton – who hasargued for launching a military strike on Iran’s nuclear infrastructure – doubled down on Trump’s late-night tweet.“I spoke to the President over the last several days, and President Trump told me that if Iran does anything at all to the negative, they will pay a price like few countries have ever paid before,” he said in a statement on Monday. While war is not imminent, the odds of a military incident occurring in the Persian Gulf is increasing..
Trump, Iran and the New Guns of August – James Stavridis, fmr Cmdr NATO – It was the midst of the Iran-Iraq War – which lasted eight years and cost more than half a million lives – and our mission was to keep the global shipping lanes open while Iran sought to control the vital strait through which flows some 35 percent of the world’s seaborne oil. . Over the next year, the U.S. Navy would eventually attack the Iranian Navy, retaliating after one of our frigates was nearly sunk by an Iranian mine in Operation Praying Mantis. Eventually, Iraq and Iran settled their differences and an uneasy peace reigned between Arabs and Persians in the flat, hot, shallow waters of the Gulf, despite occasional flare-ups, for the next three decades. Until now. The tension in the Gulf – and especially in the Strait of Hormuz – is rising again, and the echoes of those conflicts 30 years ago are getting louder. The presidents of Iran and the U.S. this week exchanged harshly worded tweets (in 1987, a tweet was something a bird did on a spring morning) and oil markets are keeping a wary eye on developments. Israel released another cache of stolen Iranian documents showing the perfidy and determination of its nuclear program. What would a conflict centered on the Strait of Hormuz look like? How long would it last? And above all, what is the best strategy the U.S. could take toward Iran? We know that Iran has detailed plans to close the strait. It would use a variety of means including widespread mining; swarms of small, ultrafast patrol boats; shore-based cruise missiles; manned aircraft; and diesel submarines. Iran would employ a “layered offense,” stationing diesels in the Arabian Sea on the other side of the strait to harass incoming merchant ships; swarming U.S. and allied warships in the narrow confines of the strait itself; and mining sections of the shipping lanes. All of this, of course, is illegal under international law, but would have the intended consequence of challenging the U.S. and the Gulf Arabs while driving up oil prices exponentially. (Iran is able to export some oil from its southern coast, bypassing the strait, so its economy might suffer less than the Arabs’.) When Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani talk about shutting down the strait, they mean it. They could accomplish it in just 48 to 72 hours, as commercial shipping, out of prudence and under pressure from insurers, would opt not to take the risk of passing through the waters.
What’s at stake if trading at Strait of Hormuz is disrupted? –When Iranian President Hassan Rouhanidismissed the US efforts to block all of Iran’s crude oil exports, he neither mentioned the Strait of Hormuz, nor the actions Tehran could take to disrupt trade at the world’s busiest oil transit chokepoint, which translates to 30 percent of seaborne global oil exports every day. Rouhani’s response was nonetheless interpreted as a threat to the narrow waterway located between Iran and Oman, where at least 18.5 million barrels of oil were transported every day in 2016, based on a US energy department report. He had earlier complained that “it has no meaning for Iranian oil not be exported, while the region’s oil is exported”, adding in a defiant tone that the US “will never be able to cut Iran’s oil revenues”. Before flying back fromEurope to Tehran early on Thursday, the Iranian leader renewed his criticism of the US, saying its move to choke off Iranian oil “shows they have not thought about its consequences”.Ismali Kowsari, an Iranian Revolutionary Guard Corps (IRGC) commander, was more blunt, telling Iran’s Young Journalist Club on Wednesday that if Iranian oil exports are prevented, “We will not permit the shipment of oil through the Strait of Hormuz.” The US military quickly responded, vowing to keep the Gulf waterways open to oil tankers and “ensure the freedom of navigation … wherever international law allows.”
Strait of Hormuz – The aorta of global oil flows (pdf) Thomson Reuters paper on the Iranian threat to Hormuz
Is The Oil World In Panic Mode? – Oil markets have shown tremendous weakness in recent days, losing nearly seven dollars before rallying back a bit on Thursday.What’s causing it? Market analysts have been struggling to find a single reason for it, preferring to cite a cocktail of negative news and rumor to explain the downdraft.There have been reports of increased Saudi production to Asian customers, which many cite as a breaking of the dam of OPEC production guidelines – a break that would have many in the oil world in full panic mode.But I don’t see these promises as a collapse inside the cartel. The Asian contracts are merely adding stability to the oil markets in front of the threats of renewed U.S. sanctions on Iran. It’s been made clear that the Iranians won’t stand for any production increases that are over and above the agreed upon increases at their Vienna meeting last month – and equally clear that the Saudis don’t want to put that production agreement in jeopardy either.Many analysts are pointing to the reopening of Libyan oil ports to explain the quick drop in oil prices. But I also don’t find this explanation very compelling either: Even with these newly cleared impasses, Libyan exports are only marginally increasing, and most experts believe that Libyan production will continue to slide downwards through the rest of 2018. Others have cited the threat of slowing oil demand from China, but these predictions of slowing Chinese growth are as frequent, and usually as wrong, as dandelions growing in an open field. According to the COT reports, long positions have actually held fairly steadily through this latest 7 dollar downdraft in oil. So – WHAT IS IT? Despite the varied answers that are appearing in the media for oil’s recent drop, I can find only one convincing reason that oil is recently acting poorly despite being one of the most fundamentally bullish oil markets I have seen in my 35 years trading it. Commodities are different than stocks. . Current September commodity futures contracts don’t care where the markets will be in 6 months. They only care about their price prospects on the day they expire – the 28th of August. Because of this, they are far more sensitive to current threats than stocks and have been responding to the disastrous economic threat of a continuing trade war between the US and China (and our allies).
Hedge funds slash bullish oil positions after prices peak: Kemp (Reuters) – Hedge fund managers have slashed bullish long positions in petroleum at the fastest rate in more than a year, as the gentle profit-taking in previous weeks turned into a rush for the exit.Hedge funds and other money managers cut their combined net long position in the six most important futures and options contracts linked to petroleum prices by 178 million barrels in the week to July 17.Net long positions were reduced by the third-largest number of barrels on record, according to an analysis of data published by regulators and exchanges going back to the first quarter of 2013.The net long position in petroleum was cut below 1 billion barrels for the first time since the middle of September 2017 (https://tmsnrt.rs/2LhKO1S).The reduction was concentrated on the long side of the market, where positions were slashed by 170 million barrels, as managers took profits after the year-long rally in oil prices.Short positions rose by just 8 million barrels and remain close to multi-year lows, confirming the shift in net positioning is being driven by profit-taking rather than any newfound bearishness.Long liquidation was concentrated in Brent, with net long positions in the North Sea benchmark cut by 95 million barrels, the largest one-week reduction since the series began in 2013. But portfolio managers also cut net long positions in NYMEX and ICE WTI (-34 million barrels), U.S. gasoline (-8 million barrels), U.S. heating oil (-17 million barrels) and European gasoil (-25 million barrels). Hedge fund managers hold most of their positions in futures and options with a relatively short duration to expiry since these tend to offer the most liquidity, so the sell-off has hit near-dated contracts especially hard.
Oil prices spurred higher by Trump’s Iran tweet – Oil prices rose Monday amid a testy exchange between U.S. and Iranian leaders that underlined fears about the potential for disruptions to output in the Middle East and tighter global crude supplies. President Donald Trump “has provided a shot in the arm for prices to start the week, turning up the heat regarding tension with Iran once again,” Matt Smith, director of commodity research at ClipperData, told MarketWatch. “Iranian crude exports have dropped to a six-month low so far in July — a trend which will continue apace if the U.S. administration has its way.” Trump on Sunday tweeted an all-caps message to his Iranian counterpart, Hassan Rouhani, warning that threats against the U.S. will be met with “consequences…few in history have suffered before.” The tweet appeared to refer to comments Rouhani had made warning against hard-line U.S. policies on Iran. September Brent crude traded 42 cents, or 0.6%, higher, at $73.49 a barrel on ICE Futures Europe. The global benchmark had marked a weekly loss of about 3% through Friday, logging its third straight weekly fall. September West Texas Intermediate crude , which became the front-month contract at Friday’s session close, added 30 cents, or 0.4%, at $68.56 a barrel Monday. The August contract, the U.S. benchmark, finished Friday at $70.46 a barrel, the highest level in a week, but not enough to reverse a 0.8% weekly drop, which was also the third decline in a row. “Iran will not back down, and we think there’s a Russian connection. With Trump finally talking tough about [Russian President] Vladimir Putin, we suspect that there were phone calls between Moscow and Tehran in recent days, and now there’s a new crisis for Trump: Putin may have sent Trump a message–turn on me, and I’ll play my Iranian card,” . “There’s a potential market impact here and that obviously is oil prices.” Trump in May withdrew the U.S. from a 2015 international agreement to curb Iran’s nuclear program, setting the stage for the reimposition of economic sanctions that are expected to hinder Iran’s oil industry. Analysts have estimated up to 1 million barrels a day out of Iran’s more than 2.5 million barrels a day of crude exports could be at risk.
Crude Oil Prices Settle Lower Despite Rising U.S.-Iran Tensions – WTI crude oil prices settled lower Monday as investor concerns faded about a global supply shortage that followed a heated exchange between the U.S. and Iran. On the New York Mercantile Exchange crude futures for September delivery fell 37 cents to settle at $67.89 a barrel, while on London’s Intercontinental Exchange, Brent rose 0.03% to trade at $73.10 a barrel. Concerns about the prospect of an oil supply shortage returned Monday, albeit briefly, after President Donald Trump warned his Iranian counterpart, Hasan Rouhani, that threats against the U.S. would be met “with consequences few in history have suffered.” Trump’s tweet came as Rouhani said hostile U.S. policies towards Tehran could lead to “the mother of all wars.” Trump in May said the United States would leave the 2015 Iran nuclear agreement, paving the way for sanctions, which are expected to hamper the Islamic Republic’s Energy Industry, to resume. Yet the prospect of a big drop in Iranian crude exports has waned in recent weeks as the U.S. has hinted waivers could be in the offing to some buyers of Iranian crude. Some oil observers also cited escalating trade-war tensions between the U.S. and China as a headwind, keeping some investors sidelined amid remarks over the weekend at the G20 Finance Ministers Summit from U.S. Treasury Secretary Steven Mnuchin. “It’s definitely a realistic possibility,” Mnuchin said of Trump following through on a threat to impose tariffs on all $500 billion worth of goods the U.S. imports from China each year. Trump had threatened on Friday to impose tariffs on $500 billion of Chinese exports to the United States unless Beijing agreed major changes to its policies on technology transfer, industrial subsidy and joint ventures. The timid start to the week for oil prices comes as data on Friday showed speculators continued to trim bullish on oil for the second-straight week.
Oil market hits a cyclical pause: Kemp (Reuters) – Brent crude futures prices are trading in contango for the first time in 10 months, as traders anticipate an increase in crude availability during the remainder of 2018. The Brent calendar spread for the first six months slumped into a contango of 43 cents per barrel on Monday, from a backwardation of $3.50 as recently as April 26. Brent futures are trading in contango for the four contracts closest to delivery, from September 2018 through January 2019 (https://tmsnrt.rs/2JP7ykb ). Hedge funds and other money managers have sold a large number of long positions in recent weeks, depressing the front-end of the curve. Portfolio managers tend to hold a majority of their positions in contracts close to expiry because that’s where the liquidity is normally greatest. Just as position-building by the hedge funds spurred the rise in spot prices and calendar spreads in the second half of 2017 and first quarter of 2018, liquidation is now accelerating the correction. More fundamentally, traders have reacted to pledges of increased output and exports from Saudi Arabia, Kuwait, the United Arab Emirates and Russia. Saudi Arabia and its OPEC and non-OPEC allies have responded to pressure from the United States to counter rising prices by increasing their production. Extra barrels have been loaded in June and July, with more promised in August, ensuring increased availability in the second half of the year. Fears about slower consumption growth as a result of a strengthening dollar and the intensifying trade conflict between the United States and China are also weighing on oil prices. Because the oil market is forward-looking, concerns about the strength of consumption growth later in 2018 and 2019 are being discounted back to lower oil prices in the near-term.
Oil Prices Head Upwards As Iran Hits Back – Oil markets appeared to take a breather on Monday, with prices largely unaffected by the increase in tensions between Iran and the United States over the weekend. On Tuesday, however, a strong response from Iran’s foreign ministry to Trump’s threats saw oil prices jump once again.. President Trump and Iranian President Hassan Rouhani traded threats over the weekend. Trump said on twitter in all-caps that Iran would “SUFFER CONSEQUENCES,” but oil prices gave up early gains on Monday, with traders seemingly dismissing the potential conflict between the U.S. and Iran. “I think the market’s a little complacent,” Bob McNally, founder and president of energy consultancy The Rapidan Group, told CNBC. Most analysts do not view conflict as necessarily likely, but if Iran shut the Strait of Hormuz, as Iranian officials hinted at, it would cause a painful shock to the oil market. “The numbers on a blockage or any kind of upset or military situation in the Strait of Hormuz, that is off to the races. Pick your number – $150, $200 – it goes sky high,” John Kilduff of Again Capital, said on CNBC. “Because we are talking about an abject shortage of oil then in the global market.” . The Permian should be “ripe” for M&A deals, but the basin has been unusually quiet since Concho Resources paid $9.5 billion for RSP Permian earlier this year. There has been $35 billion worth of deals so far this year, down by nearly half for the same period in 2017. “The oil and gas world has not had a lot of corporate M&A, certainly relative to other sectors,” Jay Horine, global head of energy investment banking at JPMorgan Chase & Co., said in a Bloomberg interview. The pipeline bottleneck in the Permian and the discounted prices for Midland crude are scaring away investors, and the battered stock prices of Permian-focused drillers have made deals difficult. Analysts say that will change next year when pipelines come online, which could usher in a wave of M&A activity.
Oil rises as fears of oversupply ebb (Reuters) – Oil prices rose on Tuesday as the market shifted focus to the possibility of increased Chinese demand, drawing attention away from oversupply worries and trade tensions between China and the United States. Brent crude settled 38 cents higher at $73.44 a barrel, after it reached a session high of $74. U.S. West Texas Intermediate (WTI) settled up 63 cents, or nearly 1 percent, to settle at $68.52. Earlier in the day, WTI reached a high of $69.05. Reports that China will increase infrastructure spending helped lessen fears that U.S.-China trade tensions will reduce the country’s demand for oil, said Phil Flynn, analyst at Price Futures Group in Chicago. “That’s going to be very bullish for oil demand,” Flynn said. “Infrastructure spending from China in the past had really jacked up oil demand, and I think that’s adding some outside support for prices.” After an 8 percent decline from multi-year highs, buyers returned to the market, said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut. The supply-and-demand picture will remain favorable unless there are significant production increases from Russia and Saudi Arabia, McGillian said, because strong global growth has led to notable reductions in crude inventories. U.S. crude stocks fell last week by 3.2 million barrels, according to the American Petroleum Institute. The larger-than-expected draw caused futures to rise in post-settlement trade, with U.S. crude at $68.73 a barrel. [API/S] Inventories were forecast for a 2.3 million-barrel draw last week, according to a Reuters poll. Stockpiles at Cushing were expected to fall for the 10th consecutive week, traders said. [EIA/S] The commitments from Russia and Saudi Arabia to increase production, along with easing supply disruptions in Libya and decreases in global refiner demand continue to weigh on prices, said Jim Ritterbusch, president of Ritterbusch and Associates. Sentiment has been driven by fears that supply could be disrupted by confrontation in the Middle East or that Washington’s trade dispute with major trading partners could dampen global growth. Iran, OPEC’s third-largest producer, which pumps 3.75 million barrels per day, has come under increasing U.S. pressure, with the administration of President Donald Trump pushing countries to cut all imports of Iranian oil beginning in November.
The Regulation That Could Push Oil To $200 — Oil prices could spike as high as $200 per barrel over the next 18 months, which would cause an “economic crash of horrible proportions,” according to a new report. A research paper from economist and oil market watcher Philip K. Verleger predicts there could be a shortage of low-sulfur diesel fuel in 2020 as a result of regulations from the International Maritime Organization (IMO) aimed at cutting sulfur emissions. The regulations, due to take effect at the start of 2020, lowers the allowed concentration of sulfur in maritime fuels from 3.5 percent to just 0.5 percent. Those rules have already sparked a scramble for low-sulfur options. But the current global refining capacity may not be able to churn out enough low-sulfur fuels to allow a smooth transition from high-sulfur fuels by the world’s shipping fleet. The shipping industry accounts for about 5 percent of total global oil demand, and most ships burn heavy fuel oil that is high in sulfur. Ship-owners will have a few options: install expensive scrubbers to remove sulfur, switch to low-sulfur fuels such as diesel or gasoil, or switch over to LNG. Scrubbers and LNG are generally thought to be the most expensive options, requiring capital outlays to overhaul entire fleets. That will put the onus on low-sulfur fuels. But the problem is that not all crude oil is the same – heavier and sour varieties hold more sulfur and are unable to produce lower sulfur diesel without extra processing. And not all refineries are equipped to handle that processing. Up until now, the maritime industry has been burning the residual fuel oil left over after the refining process. Fuel oil is the bottom of the barrel – it’s the cheapest, most viscous and dirtiest part of the barrel. By 2020, diesel production will need to rise by at least seven percent, according to Philip K. Verleger, on top of the three percent increase needed for road transport and other uses. All of it will need to be low-sulfur. “It is not clear that the greater volumes can be produced,” Verleger wrote in his paper. “Instead…very large price hikes may be required to suppress non-maritime use.” He predicts a rerun of the historic price spike in 2007-2008, which was in part the result of a shortage of low-sulfur oils. Refiners found themselves in a bidding war for low-sulfur oil, pushing oil prices to well over $100 per barrel. “This situation will reoccur in 2020,” Verleger wrote, except that the price spike could be even more dramatic because “the fuel shift is greater and the refining industry is less prepared.”
WTI/RBOB Extend Gains After Broad Inventory Draws, Flat Production – WTI/RBOB are holding gains, helped by a weaker dollar, after last night’s API draws, and extended gains after DOE reported across the board inventory draws and no increase in US production. Bloomberg Intelligence Senior Energy Analyst Vince Piazza noted that bearish concerns are brewing in a U.S. crude market awash with domestic supply and braced for the reintroduction of OPEC oil. Exports had been a safety valve, but they declined to less than 1.5 million barrels a day in the week ended July 13 from more than 2 million the previous period. Still, analysts expect a 3 million-barrel draw for the week through July 20. Piazza also notes that U.S. refiners will start to cull runs and enter maintenance after early-summer oversupply narrowed U.S. crack spreads. DOE:
- Crude -6.15mm (-3mm exp, whisper -1mm)
- Cushing -1.127mm (-900k exp)
- Gasoline -2.328mm
- Distillates -101k
After last week’s surprise build in crude inventories, this week saw that reversed and some with a 6.15mm draw… Notably, crude inventories in the European storage hub at Amsterdam, Rotterdam and Antwerp rose by 3.3 million barrels last week, according to Genscape data. Despite huge discounts still in the Permian, last week saw a surge in production to a record 11mm b/d, but this week it remained flat…
Oil gains as U.S. crude stocks fall to lowest since Feb. 2015 – – (Reuters) – Oil prices rose for the second consecutive day on Wednesday after U.S. government data showed domestic crude inventories fell to their lowest since February 2015, easing worries about oversupply that have weighed on markets in recent weeks. Brent crude futures rose 49 cents to settle at $73.93 a barrel, a 0.67 percent gain. U.S. West Texas Intermediate (WTI) crude futures rose 78 cents to settle at $69.30 a barrel, a 1.14 percent gain. U.S. crude inventories fell 6.1 million barrels in the week to July 20, data from the U.S. Energy Information Administration showed, to 404.9 million barrels, their lowest since February 2015. Analysts had expected a decrease of 2.3 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 1.1 million barrels, EIA said, their lowest since November 2014. Gasoline stocks fell 2.3 million barrels, EIA data showed, compared with analysts’ expectations in a Reuters poll for a 713,000-barrel drop. Meanwhile, U.S. Midwest gasoline stockpiles fell to their lowest seasonally since 2015. “Stronger product demand rounds out a supportive report, encouraging a decent draw to gasoline stocks,” said Matt Smith, director of commodities research at ClipperData. However, price gains were limited after the release of the data because a majority of the crude stock draw was in the West Coast region, also known as PADD 5. Stocks in the area fell their most since December 2011. The market usually discounts large inventory drawdowns when they are concentrated in the West Coast, said John Kilduff, a partner at Again Capital Management in New York, because limited connectivity from the West Coast to the rest means it is “just not as critical to the overall inventory situation.” Prices were also supported by an International Monetary Fund report about skyrocketing inflation in Venezuela, suggesting a limited ability for that country to boost oil output, said Stephen Innes, a trader at brokerage OANDA. “Venezuelan oil production has already plummeted to a new 30-year low of 1.5 million barrels a day in June,” he said. Oil prices have come under pressure this month as a trade dispute between the United States and China, as well as other major economic blocs, has raised the possibility of slower economic growth and weaker energy demand. Reports that China will increase infrastructure spending reduced some concerns that U.S.-China trade tensions will dent Chinese demand for oil.
Risks rising that oil prices will cause next recession — Oil gained more than 20 percent in the first half of 2018, and odds have been rising that higher crude oil prices will spark the next economic downturn. This should not come as a surprise for any investor who is a student of market history: The last five U.S. recessions were also preceded by a rise in oil prices. “Quickly rising oil prices have been a contributing factor to every recession since World War II,” said Moody’s chief economist Mark Zandi. Odds of a 2020 U.S. recession have risen to 34 percent, from 28 percent before this year’s spike in crude oil, Moody’s stated in a report. President Donald Trump’s tax cut, a deal on Capitol Hill to boost government spending, and a flattening of the difference between short- and long-term interest rates also are contributing to the elevated recession risk. “My recession odds for 2020 have significantly increased since late last year,” Zandi said.Oil seesawed in trading on Monday after President Trump’s tweet about Iran added to a geopolitical catalysts for oil. It started trading strong but trailed off by the end of the day. Recent swings in the price of oil – especially early last week, when Treasury Secretary Steve Mnuchin said some buyers of Iranian oil may be given extra time before sanctions hit, and Trump and Russian President Vladimir Putin discussed working together to regulate oil prices – show that the oil trade remains vulnerable to a downturn.Sanctions against Iran, reimposed as Trump repudiated his predecessor’s deal to halt Iran’s development of nuclear weapons, is playing a major role in crude oil prices. In late June the Trump administration signaled that oil buyers must stop buying Iranian crude by November, and shortly after, Trump said he had a deal with the Saudis to increase production, though doubts remain about the Saudis’ ability to increase production by as much as 2 million barrels. In June figures reported last week, Saudi production was up by 500,000 barrels as it tries to tame the recent growth in crude oil prices. But the Saudis also have also said they cannot raise oil productionabove that level this month.
Oil prices pare gains after earlier rise on Saudi news – (Reuters) – Oil prices rose for the third consecutive day on Thursday after Saudi Arabia suspended oil shipments through a strait in the Red Sea following an attack on two oil tankers and as trade tensions between the United States and the European Union eased. Brent futures rose 61 cents to settle at $74.54 a barrel, a 0.8 percent gain. The contract earlier touched $74.83 a barrel, highest since July 16. U.S. West Texas Intermediate (WTI) crude futures were up 31 cents, settling at $69.61, a 0.5 percent gain. After meeting European Commission President Jean-Claude Juncker at the White House on Wednesday, U.S. President Donald Trump agreed to refrain from imposing car tariffs while the European Union and the United States start talks on cutting other trade barriers. “Certainly it’s positive for the economy and commodities,” said John Kilduff, partner at Again Capital Management in New York. “This sort of revives economic prospects that were dimmed from the trade wars that were started.” Brent rose in post-close trading on Wednesday after Saudi Arabia said it was “temporarily halting” oil shipments through the Red Sea shipping lane of Bab al-Mandeb after an attack by Yemen’s Iran-aligned Houthi movement. Any move to block the Bab al-Mandeb, which is between the coasts of Yemen and Africa at the southern end of the Red Sea, would virtually halt oil shipments through Egypt’s Suez Canal or the SUMED crude pipeline that link the Red Sea and Mediterranean. An estimated 4.8 million barrels per day of crude oil and refined products flowed through the Bab al-Mandeb strait in 2016 toward Europe, the United States and Asia, according to the U.S. Energy Information Administration. Saudi Arabia additionally has the Petroline, also known as the East-West Pipeline, which mainly transports crude from fields clustered in the east to Yanbu for export. That could offset a bottleneck caused by Bab al-Mandeb’s closure.
Oil Prices Slip As Rig Count Inches Higher – Baker Hughes reported an increase to the number of active oil and gas rigs in the United States on Friday. Oil and gas rigs increased by 2 rigs, according to the report, with the number of active oil rigs increasing by 3 to 861 this week, while the number of gas rigs dipped by 1, hitting 186.The oil and gas rig count now stands at 1,048 – up 90 from this time last year, with the number of oil rigs accounting for all of that increase.Canada gained 12 oil and gas rigs for the week, all of which were oil rigs. Canada’s oil and gas rig count is now up just 3 year over year. Oil rigs are up by 12 year over year in Canada, while the number of gas rigs were flat.The biggest winner by basin this week was the Permian, which gained 4 rigs. Granite wash came in second, adding 2 rigs for the week.Oil prices were trading relatively even early on Friday morning in quiet trade, but were on track for their first weekly gain in four weeks as tension around a key Middle Eastern chokepoint between the Iran-backed Houthis and Saudi Arabia lent support to the price of oil earlier this week. By 12:26pm EDT, WTI crude was trading down while Brent crude was trading up – widening the WTI discount to Brent. WTI was trading down 0.45% (-$0.31) at $69.30. Brent crude was trading up 0.05% (+$0.04) at $75.16 per barrel – both up on the week. US production this was unchanged, staying at last week’s psychologically important high of 11 million bpd, after hovering at 10.9 million bpd since week ending June 08. At 15 minutes after the hour, WTI was trading down 1.59% at $68.50, with Brent trading down 0.80% at $74.52.
Oil Prices Fall With Stock Market; Brent Marks Weekly Gain – (Reuters) – Oil prices fell on Friday, weighed down by a drop in the U.S. equities market, but Brent still marked a weekly increase, supported by easing trade tensions and a temporary shutdown by Saudi Arabia of a key crude oil shipping lane. Brent crude futures fell 25 cents to settle at $74.29 a barrel, but notched a 1.8 percent weekly increase, its first increase in four weeks. U.S. West Texas Intermediate (WTI) crude futures fell 92 cents to settle at $68.69 a barrel, and marked a fourth week of declines, falling about 2.4 percent. Depressing oil prices, U.S. stock markets broadly fell on Friday. Crude futures at times track with equities. “That could show some sign of a slowdown in the economy, which could in turn affect oil consumption,” s The oil market largely brushed off government data on Friday that said the U.S. economy grew in the second quarter at its fastest pace in nearly four years. “The reason why we’re not rallying off that is because it came in line with expectations, but when you’re running that kind of a GDP, that’s a lot of oil.” U.S. energy companies added three oil rigs in the week to July 27, the first time in the past three weeks that drillers have added rigs, General Electric Co’s Baker Hughes energy services firm said on Friday. Hedge funds trimmed their bullish wagers on U.S. crude, cutting their combined futures and options position in New York and London by 11,362 contracts to 412,289 in the week to July 24, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. That was the lowest level since late June, the data showed.
Russia does not use stocks in tanks to help boost oil output: Novak (Reuters) – Russia does not use stocks in tanks to help boost oil output and does not have enough stocks to influence the oil market, Russian Energy Minister Alexander Novak told reporters in Johannesburg late on Thursday evening. Russia used stocks held in tanks at its oilfields to help boost crude production in June, three industry sources told Reuters in July, in a sign of supply flexibility as OPEC kingpin Saudi Arabia pushes other major producers to increase spare output capacity. Russia does have some flexibility thanks to spare capacity in the Transneft pipeline system and in oil tanks at fields, the sources said. “Transneft of course has its own oil storage facilities for the technological process. But we of course do not have large (storage) capacity which would regulate the market,” Novak said. Russia does not have storage capacity for accumulating of reserves, the minister said, adding that such a project would require a huge investment which may not provide an economic return. Russian oil production last month rose by around 100,000 barrels per day from May. From July 1-15, the country’s average oil output was 11.215 million bpd, an increase of 245,000 bpd from May, two industry sources said. Novak said that Russia has raised oil output by increasing oil production, not by using stocks. The Organization of the Petroleum Exporting Countries (OPEC) and other oil producers led by Russia agreed last month to ease production curbs. The deal effectively increases combined oil output by 1 million barrels per day (bpd), of which Russia’s share stands at 200,000 bpd.
Russia and OPEC may form new organization – New OPEC-Russia organisation may start its work on 1 January 2019, Russian energy Minister Alexander Novak said.The minister specified that it will retain the functions of regulating oil production and will be able to cut it again, if necessary.“We plan to start this mechanism on January 1, 2019. We will discuss it at a ministerial meeting,” TASS cited Novak as saying. He added that the options for the name of the new organization’s name have yet to be chosen, as well as the location of the headquarters. According to the head of the Ministry of Energy, he does not expect the overproduction of oil in the foreseeable future, despite the recent decision by OPEC + to increase production by 1 million barrels per day. “On the contrary, the market is rebalancing, a deficit can be expected,” Novak predicts. A leading analyst of the National Energy Security Fund, Igor Yushkov, noted that the format of Russia’s cooperation with OPEC is likely to remain at the current coordination level. “It is rather difficult to imagine any new format, since Russia has been de facto a member of OPEC for more than a year – we have been committed to the volumes of production, execute them, we constantly meet with OPEC members and discuss the situation on the market, monitor the effectiveness of regulation volumes of oil output,” he recalled. “OPEC and Russia will benefit equally from such cooperation and a constant information campaign around it with regular statements that we jointly monitor the market and an acceptable level of prices. We have already seen how prices have risen to $80 per barrel, now they have gone down to $70, but this corridor is comfortable for everyone,”
Meanwhile, Saudis Stuck On Oil Thanks To MbS Crackdown — Saudi Crown Prince Mohammed bin Salman (MbS) has a plan to get Saudi Arabia off oil, with an immediate push to create 1.2 million private sector jobs by 2020. However, as Juan Cole reports, his political crackdown last year in which over 300 people were tossed in jail for various supposed crimes, with many of them now having frozen bank accounts and other restrictions placed on them, has somewhat scuttled this project badly. 700,000 foreign workers have left,and foreign direct investment has fallen from $7.42 billion in 2016 to $1.32 billion in 2017. Oooops! This is not the way to wean the nation off oil. Nobody wants to invest because they fear MbS will go on another rampage, seizing money and putting people in prison. Of course, it is now clear that Trump and his son-in-law, Jared Kushner, encouraged MbS in his coup against his cousin, former Crown Prince Mohammed bin Nayef. They also supported his stupid war in Yemen and initially encouraged him in his campaign against Qatar, still ongoing although a total flop, although on that one Trump has figured out that the largest US air base in the Persian Gulf, al-Ubeid, is there, so he has lost his enthusiasm for this particular stupid project of MbS’s. Unfortunately, there is little prospect this 32 year old leader will be removed from power any time soon.
Higher Oil Prices Fail To Stimulate Economic Growth In Gulf States – The higher oil prices and the subsequent higher oil revenues play a part in a significantly improved outlook for the state finances and trade balances of the Arab Gulf countries, but they are not boosting economic growth, a quarterly Reuters poll of 24 economists showed on Tuesday. The Arab Gulf states have good reason to be happy about their budgets and government accounts this year, as the oil prices have been significantly higher and because they are now boosting their oil production to offset declines in Venezuela and Angola and an anticipated slump in Iran’s oil exports.The Gulf states – Saudi Arabia and its close allies Kuwait and the United Arab Emirates (UAE), for example – are also some of the few OPEC countries theoretically capable of boosting their crude oil production.So far this year, the Brent Crude price has averaged $71.60 a barrel, compared to an average of $55 per barrel last year.Despite the double boon from higher oil prices and rising oil production, the Gulf economies are only modestly growing, and the higher oil revenues will have little impact on that growth, according to the economists polled by Reuters in this quarter’s survey. The governments in the Gulf would rather use the higher oil income to cut budget deficits than to spur economic growth, economists say. The private sector in the Gulf oil-producing countries is still reeling from austerity measures that the governments introduced to try to keep budgets in check after the oil prices slumped. “Higher-than-budgeted oil revenue will not result in higher government expenditure, but rather, it will contribute to lowering the fiscal deficit,” Saudi investment bank Jadwa said about Saudi Arabia. In the previous Reuters quarterly poll, economists were of the same opinion – trade surpluses in the Arab Gulf will increase, but economies will grow only moderately because of the austerity measures.
Saudi Aramco CEO: Deal for Sabic Would Affect IPO Timeline — Saudi Aramco signaled another potential delay for the world’s largest initial public offering after it started talks this week to buy a stake in a local petrochemical company. The state-owned oil company said it may buy a strategic stake in Saudi Basic Industries Corp. from the country’s sovereign wealth fund. Sabic, as the chemical company is known, carries a market value of little more than $100 billion and the sovereign wealth fund controls a 70 percent stake. Amin Nasser, Aramco’s chief executive officer, said in an interview that the company is still in the early stages of talks and a deal isn’t certain. “A potential Sabic deal would affect the time frame for Saudi Aramco’s initial public offering,” Nasser told Arabiya television in an interview airing Friday. A stake in a chemical company like Sabic makes Aramco less vulnerable to volatile oil prices, and would be positive for its revenue, Nasser told Arabiya The remarks raise the specter of further delay for an IPO that could raise as much as $100 billion. Saudi Energy Minister Khalid al-Falih said last month that while “it would be nice if we can do it in 2019, there is a lot more at stake than just ticking a box and say, ‘We got this out of the way.”’
Has Saudi Arabia Fooled Oil Analysts? — The world’s largest oil company Saudi Aramco, the main revenue source for the Kingdom, is the latest source of intrigue for observers, with rumors that it is targeting a majority stake in one of the world’s largest petrochemical giants – SABIC. This move has been misunderstood by many analysts, and may actually be an ambitious attempt to counter the continuous delays that the planned Aramco IPO has faced. MBS’s advisors have come up with this strategy in order to restructure the Saudi economic base, provide the Kingdom with renewed power in the downstream sector, and address the much-needed additional funding for Saudi Arabia’s Vision 2030.Rumors that Saudi Aramco was looking to acquire SABIC began with suggestions that the oil giant would acquire a minority stake in the petrochemical company, but now it appears that Aramco is making a much larger move.Today, Saudi sources have stated that Aramco is targeting the entirety of the 70 percent stake in SABIC that is currently held by the Saudi sovereign wealth fund PIF. This move would create an oil company the likes of which has never been seen before. Whether these latest reports are reliable is yet to be seen, but the impact on the shape of global oil markets would be significant. Sources have reported that JPMorgan and Morgan Stanley have been appointed as advisors to Aramco’s move to buy a controlling stake in SABIC.SABIC has long been ruling the downstream sector in the Kingdom, while Aramco was focused on its upstream endeavors. The continuous international growth in Saudi Arabia’s downstream sector and the successful acquisition of entities in Europe (including DSM Petrochemicals) and elsewhere, saw SABIC growing increasingly powerful. As always, success created not only competition but also a kind of envy. Aramco’s dream of ruling the world’s up and downstream sector was always partly constrained by SABIC’s ongoing success. But now that Crown Prince Mohammed bin Salman has taken control in the Kingdom, it appears that Aramco will regain full power in downstream and lock in its own future demand in targeted markets. By acquiring a controlling stake in Saudi Arabia’s second most influential oil company, Aramco would gain near-complete control.
Saudi Arabia Pressures Aramco to Take On Debt After IPO Stalls — Saudi Arabia is pushing Aramco to raise tens of billions of dollars in debt now that the state oil giant’s initial public offering has stalled, as the kingdom pursues other ways to fund an economic transformation. Crown Prince Mohammed bin Salman’s advisers are prodding Saudi Arabian Oil Co., as the oil company is officially known, to raise debt to buy a controlling stake in a petrochemical company from the country’s sovereign-wealth fund, said Saudi officials and executives familiar with the talks. A potential deal would give the Public Investment Fund between $50 billion and $70 billion for all or part of its stake in Saudi Basic Industries Co., officials and executives said. Controlled by the state, Sabic is the country’s largest publicly listed company, with a market capitalization of about $100 billion. That sum is roughly what the sovereign-wealth fund had expected to reap from Aramco’s plan to go public. Preparations for an IPO have stalled amid doubts about the company’s and country’s readiness to handle the scrutiny that accompanies a public listing of shares. Aramco has already begun seeking billions of dollars in loans from international banks to finance the Sabic deal, according to people familiar with the matter. That debt could be lent in three parts, with the first tranche of up to $10 billion likely to be raised this year, these people said. Aramco is also looking to raise money on the international bond market, Saudi officials and executives said, a move that could open its accounts up to scrutiny from investors.
Saudi Arabia halts oil exports in Red Sea lane after Houthi attacks (Reuters) – Saudi Arabia said on Thursday it was suspending oil shipments through the Red Sea’s Bab al-Mandeb strait, one of the world’s most important tanker routes, after Yemen’s Iran-aligned Houthis attacked two ships in the waterway. Brent futures rose 19 cents to $74.12 a barrel by 1305 GMT, extending their rally into a third day but slipping from a 10-day high in earlier trading. [O/R] Saudi Arabia and arch-foe Iran have been locked in a three-year proxy war in Yemen, which lies on one side of the Bab al-Mandeb strait at the southern mouth of the sea, one of the most important trade routes for oil tankers heading from the Middle East to Europe. The Houthis, who have previously threatened to block the strait, said on Thursday that they had the naval capability to hit Saudi ports and other Red Sea targets. Iran has threatened to block another strategic shipping route, the Strait of Hormuz. Saudi Energy Minister Khalid al-Falih said the Houthis attacked two Saudi oil tankers in the Red Sea on Wednesday, one of which sustained minimal damage. “Saudi Arabia is temporarily halting all oil shipments through Bab al-Mandeb strait immediately until the situation becomes clearer and the maritime transit through Bab al-Mandeb is safe,” he said. It was not clear if a Saudi-led military coalition would take additional security measures or impose further restrictions on imports to Yemen, which is struggling with the world’s most urgent humanitarian crisis. A senior oil source said Saudi Arabia had already beefed up oil security and that all crude vessels in the area are accompanied by security ships. Saudi crude exports through Bab al-Mandeb are estimated at around 500,000-700,000 barrels per day (bpd), according to analysts and Reuters data. Most Gulf oil exports that transit the Suez Canal and SUMED Pipeline pass through the strait.
Hundreds of White Helmets evacuated from Syria to Jordan -Hundreds of White Helmets rescuers and their families have been evacuated from Syria to Jordan overnight with the help of Israel, the United States and European countries. Also known as Syrian Civil Defence, the White Helmets operate in rebel-held parts of war-ravaged Syria. The request for the evacuation came as the volunteers and their relatives were threatened by advancing forces of the Syrian government in the south of the country.The evacuees were transported on Sunday to Jordan, from where they are expected to be resettled in Europe and Canada in the coming weeks. Jordan’s Foreign Minister Ayman Safadi saidon Twitter that 422 people were evacuated, instead of the initial 800 cleared for the operation. A non-Jordanian source familiar with the agreement told Reuters news agency the original plan had been to evacuate 800 people, but only 422 made it out as operations were hampered by government checkpoints and the expansion of Islamic State in the area. The Israeli military earlier said it had “recently completed a humanitarian effort to rescue members of the Syrian civil organisation and their families” after a “request of the United States and additional European countries”.
More Shocking Details Emerge Of White Helmets Evacuation From Syria – Since the overnight Saturday and into early Sunday Israeli military operation which successfully evacuated White Helmets membersand their families from southwest Syria at the request of the US and European governments, new details and footage have emerged. First, what we find most striking and woefully under-reported in international media is that the fact that armed groups immediately set fire to Quneitra crossing on the Syrian side of the border the morning just after the White Helmets passed through it to the Israeli side. The post acts as the only crossing between Syrian territories and the Israeli-occupied Golan Heights, and was formerly run by the United Nations Disengagement Observer Force (UNDOF). There is over a mile in distance between the Syrian and Israeli sides of the crossing. Middle East-based Al Masdar News reported Monday that the crossing was used by Nusra militants (also called Jabhat Fatah al-Sham/JFS, or Syrian al-Qaeda) to store weapons, ammunition and various supplies provided by Israeli Army, suggesting that its destruction by al-Qaeda and FSA fighters may have been an attempt at concealing the extent of their external state sponsorship by the Israelis. Meanwhile, Israel released professionally edited footage of the nighttime transfer of White Helmets and their families into Israel via the Golan border in what the IDF called “an exceptional humanitarian gesture”. The UK, Germany, and Canada have confirmed they will resettle the White Helmets members and their families, with German Interior Minister Horst Seehofer announcing Germany would issue residency permits to eight White Helmets, allowing them to bypass asylum applications. The move has come under fierce criticism by Syrian and Russian leaders, as well as some journalists in the West who have long documented the group’s associations with Nusra Front, which is a designated terrorist group in the US and internationally. Some have questioned just who it is that’s being resettled and their ties to extremist groups.
Trump seeks to revive ‘Arab NATO’ to confront Iran (Reuters) – The Trump administration is quietly pushing ahead with a bid to create a new security and political alliance with six Gulf Arab states, Egypt and Jordan, in part to counter Iran’s expansion in the region, according to U.S. and Arab officials. The White House wants to see deeper cooperation between the countries on missile defense, military training, counter-terrorism and other issues such as strengthening regional economic and diplomatic ties, four sources said. The plan to forge what officials in the White House and Middle East have called an “Arab NATO” of Sunni Muslim allies will likely raise tensions between the United States and Shi’ite Iran, two countries increasingly at odds since President Donald Trump took office. The administration’s hope is that the effort, tentatively known as the Middle East Strategic Alliance (MESA), might be discussed at a summit provisionally scheduled for Washington on Oct. 12-13, several sources said. The White House confirmed it was working on the concept of the alliance with “our regional partners now and have been for several months.” Saudi officials raised the idea of a security pact ahead of a Trump visit last year to Saudi Arabia where he announced a massive arms deal, but the alliance proposal did not get off the ground, a U.S. source said. Sources from some of the Arab countries involved also said they were aware of renewed efforts to activate the plan. Officials from other potential participants did not respond to requests for comment. “MESA will serve as a bulwark against Iranian aggression, terrorism, extremism, and will bring stability to the Middle East,” a spokesperson for the White House’s National Security Council said. The spokesperson declined to confirm that Trump would host a summit on those dates and sources cautioned that it remains uncertain whether the security plan will be finalized by mid-October. Similar initiatives by previous U.S. administrations to develop a more formal alliance with Gulf and Arab allies have failed in the past.
At least 10 Iranian Revolutionary Guards killed in border attack – At least 10 Iranian border guards have been killed in an overnight attack by unidentified gunmen near the border with Iraq, according to media in Iran.The incident took place near the town of Marivan, in a Kurdish area of Iran some 620km west of the capital, Tehran, according to the semi-official Fars news agency.”The attack by the evil rebels and terrorists against a revolutionary border post and the explosion of a munitions depot caused the martyrdom of 10 fighters,” a statement by the Islamic Revolutionary Guard Corps, as quoted by the semi-official Tasnim news agency, said on Saturday.Provincial security official Hosein Khosheqbal told state television that 11 members of the Guards’ voluntary Basij forces were killed in the overnight violence in Marivan, which he blamed on the Kurdish armed opposition group The Party of Free Life of Kurdistan (PJAK). “The latest news is that the Basij [the government-aligned militia] and Guards forces are in hot pursuit of the attackers,” Khosheqbal said.
Israeli jets said to strike Iranian-run missile production facility in Syria – Israeli jets reportedly carried out a strike Sunday on a missile production facility in northwest Syria that observers say was supervised by Iranians. In the past, the site was allegedly used to produce and store chemical weapons. “One of our military positions in Masyaf was the target of an Israeli air aggression,” Syria’s official news agency SANA said quoting a military source. Hebrew media quoted Syrian opposition officials as saying that several Hezbollah members were killed, but the reports could not be confirmed. SANA said the strikes cause only “material damage.” It was the fourth time this month that Syria has accused Israel of bombing a military position in the country. There was no comment from Israel, but the strike came just hours after Prime Minister Benjamin Netanyahu warned Israel was continuously acting against Iran’s military activities in Syria. “We will not stop taking action in Syria against Iran’s attempts to establish a military presence there,” he said in a statement from his office. A war monitor, the Britain-based Syrian Observatory for Human Rights, also reported the air strike and said it targeted a “workshop supervised by Iranians where surface-to-surface missiles are made.”
Israel Rejects Russian Plan To Keep Iranian Forces 100km From Golan Border – Israel has rejected a Russian proposal to keep Iranian forces in Syria at least 100 kilometers from the Syrian-Israeli recognized ceasefire line along the Golan Heights, Reuters reports, while Israeli leadership has further threatened to hold Assad responsible “for any Iranian aggression”.According to the breaking report, which cites an unnamed Israeli official, the issue came up during a meeting between Israeli Prime Minister Benjamin Netanyahu and a visiting Russian delegation led by Russia’s foreign minister, Sergei Lavrov: The official said that Netanyahu told Lavrov “we will not allow the Iranians to establish themselves even 100 kilometres from the border.” And crucially, the official paraphrased the following exchange from the closed door meeting: “Netanyahu told Lavrov Israel will maintain freedom of operation against Iranian entrenchment in all of Syria and will see Assad responsible for any Iranian aggression against Israel from Syrian territory because Assad is the one hosting the Iranians.”
Adolf Hitler’s spirit has ‘re-emerged’ in Israel, Turkey’s president claims – Turkey’s president has ignited a war of words with Israel after claiming that the spirit of Adolf Hitler has re-emerged in the country.Recep Tayyip Erdogan’s remarks come after the Israeli Knesset passed a law stipulating that only Jews have the right of self-determination, angering members of the country’s Arab minority.The approval of the nation-state law shows Israel is the most “Zionist, fascist and racist” country in the world, Mr Erdogan said.He added that the law legitimised unlawful actions and oppression against Arab minorities, and he accused Israel of trying to form “an apartheid state”. Israeli Prime Minister Benjamin Netanyahu responded by saying Turkey is becoming a “dark dictatorship” under Mr Erdogan’s leadership.Mr Erdogan also called on the international community to mobilise against Israel in one of his harshest onslaughts against the country.In a speech to AK Party lawmakers, he said: “The Jewish nation-state law passed in the Israeli parliament shows this country’s real intentions. It legitimises all unlawful actions and oppression.”He said Israel had shown itself to be a “terror state” by attacking Palestinians with tanks and artillery, adding: “There is no difference between Hitler’s Aryan race obsession and Israel’s mentality.”The spirit of Hitler, which led the world to a great catastrophe, has found its resurgence among some of Israel’s leaders.” Mr Netanyahu accused the Turkish president of “massacring Syrians and Kurds” in response, adding that Mr Erdogan’s administration had “imprisoned tens of thousands of citizens”.
Chinese President Xi Jinping wraps up UAE visit with series of deals to boost presence in Middle East — China and the United Arab Emirates have agreed to strengthen their cooperation on a wide range of areas from trade to military and energy as President Xi Jinping wrapped up his visit to the Middle Eastern nation on Saturday. Xi arrived in Senegal on Saturday for the start of a tour of Africa that will seek to develop China’s economic and military ties on the continent. At the end of a showy, three-day visit to the UAE, during which the Chinese leader was given a horse by his Emirati counterpart, the two countries signed a slew of agreements. These included one for strategic cooperation between two state-owned oil companies, the Abu Dhabi National Oil Company and China National Petroleum Company, after the former awarded US$1.6 billion worth of contracts to the latter. The agreements and memoranda of understanding also played up Xi’s signature Belt and Road Initiative and included a deal to allow state-owned financial services firm Industrial Capacity Co-Operation Financial Group to set up a lending platform in Abu Dhabi. A deal was also reached for the Zhejiang China Commodities City Group to build a “traders market” at the Dubai Jebel Ali free economic zone. The joint statement issued by the two nations also announced plans for joint military training exercises.