Oil, Gas, And Fracking News Reads: 23February 2020 – Part 2

Written by rjs, MarketWatch 666

Here are some more selected news articles about the oil and gas industry from the week ended 22 February 2020. Go here for Part 1.

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

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US Set on Thwarting $6B Russia-Germany Gas Pipeline— President Donald Trump’s top energy official said he’s confident that Russia won’t be able to complete the Nord Stream 2 gas pipeline in the Baltic Sea — and signaled that the U.S. will press forward with its opposition to the project. Asked about Russian efforts to circumvent U.S. sanctions on the pipeline by completing it on its own, U.S. Energy Secretary Dan Brouillette said “they can’t” — and dismissed claims that project owner Gazprom PJSC will face only a short delay. “It’s going to be a very long delay, because Russia doesn’t have the technology,” Brouillette said in an interview at the Munich Security Conference on Saturday. “If they develop it, we’ll see what they do. But I don’t think it’s as easy as saying, well, we’re almost there, we’re just going to finish it.” The pipeline, which would pump as much as 55 billion cubic meters of natural gas annually from fields in Siberia directly to Germany, has become a focus for geopolitical tensions across the Atlantic. Trump has assailed Germany for giving “billions” to Russia for gas while it benefits from U.S. protection. Nord Stream 2’s owners had invested 5.8 billion euros ($6.3 billion) in the project by May 2019, according to company documents. U.S. sanctions in December forced Switzerland’s Allseas Group SA, which was laying the sub-sea pipes, to abandon work, throwing the project into disarray. The U.S. has said Europe should cut its reliance on Russia for gas and instead buy cargoes of the fuel in its liquid form from the U.S. “It’s distressing to Americans that, you know, Germany in particular and others in Europe would rely upon the Russians to such a great degree,” Brouillette said, adding that he is unaware of additional sanctions should Russia move to defy the U.S. Even as he spoke, signs emerged that Gazprom’s attempts at completion may be underway. A Russian pipe-laying vessel, the Akademik Cherskiy, left the port where it had been stationed in Nakhodka on Russia’s Pacific coast last Sunday. Russian Energy Minister Alexander Novak last year mentioned that vessel as an option to complete the pipeline in Denmark’s waters. The vessel is now expected to arrive in Singapore on Feb. 22, according to ship-tracking data on Bloomberg. While Gazprom has said it’s looking at options to complete the pipeline, it hasn’t given any details on where it will find the ship to do the work. One of the pipeline’s financial backers, Austrian gas and oil company OMV AG, has predicted that the Russians will follow through.

US Says Latest Sanctions Have Finally Thwarted Russia-Germany NS2 Gas Pipeline -The Trump administrated is claiming to have successfully thwarted the multi-billion dollar Russia-Germany gas pipeline known as Nord Stream 2, after US sanctions in December took direct aim at the European and international companies and their executives assembling the controversial 760-mile long project that would allow Russia to export natural gas directly to Germany.Bloomberg reports the White House’s “top energy official said he’s confident that Russia won’t be able to complete the Nord Stream 2 gas pipeline in the Baltic Sea – and signaled that the U.S. will press forward with its opposition to the project.” It was spearheaded by Russian giant Gazprom and five European energy companies, including French electricity and gas firm Engie SA and Royal Dutch, and the Swiss company Allseas Group SA, among others; however, primary pipeline layer Allseas pulled out of the project under pressure from US sanctions. Gazprom then said it would outfit its own ships to circumvent the sancitons after Allseas dropped out. U.S. Energy Secretary Dan Brouillette, however, said of Gazprom’s efforts, “they can’t,” while denying the Russian energy giant’s claim that it will only face a “short delay”. “It’s going to be a very long delay, because Russia doesn’t have the technology,” Brouillette said while speaking on the sidelines of the Munich Security Conference over the weekend. “If they develop it, we’ll see what they do. But I don’t think it’s as easy as saying, well, we’re almost there, we’re just going to finish it.” Washington’s stance has put a significant awkward rift between it and its European ally Germany, after Berlin vowed it would see the project through while accusing the US of “interference” and “meddling” in Europe’s energy independence. “It’s distressing to Americans that, you know, Germany in particular and others in Europe would rely upon the Russians to such a great degree,” Brouillette said of Berlin’s refusal to heed the US call to fold up the project. Thus far Nord Stream 2’s owners have sunk some $6.3 billion into the project, which has elsewhere been estimated at a total $10.5 billion.

U.S. slaps sanctions on Russian oil firm in swipe at Venezuela’s Maduro – (Reuters) – The United States on Tuesday ramped up pressure on Venezuela by blacklisting a subsidiary of Russian state oil major Rosneft that President Donald Trump’s administration said provides a financial lifeline to President Nicolas Maduro’s government. The U.S. Treasury Department imposed sanctions on Rosneft Trading SA, the Geneva-based trading unit of Rosneft, as Washington targeted Moscow over its backing of Maduro’s government. The move further complicates already-fraught U.S.-Russian relations. Russia condemned the sanctions, saying they amounted to unfair competition and would not deter Moscow from continuing to work with Venezuela. Russia’s Foreign Ministry said the move would further damage relations with Washington and undermine global free trade. Venezuelan Foreign Minister Jorge Arreaza called the U.S. action “unilateral” and said Washington continued “attacking the Venezuelan people.” U.S. officials accused the Rosneft subsidiary of propping up the Venezuelan oil sector and engaging in “tricks” and ship-to-ship transfers to actively evade American sanctions. “I think this is a very significant step, and I think you will see companies all over the world in the oil sector now move away from dealing with Rosneft Trading,” Elliott Abrams, the U.S. special representative for Venezuela, told reporters. Treasury Secretary Steven Mnuchin added in a statement, “The United States is determined to prevent the looting of Venezuela’s oil assets by the corrupt Maduro regime.”

Trump Sanctions Rosneft, Russia’s Largest Oil Company, For Helping Maduro In Venezuela – The Trump administration announced significant new sanctions on Tuesday targeting Rosneft, Russia’s largest oil company, for helping Venezuelan leader Nicolas Maduro circumvent U.S. sanctions. Specifically, the sanction targets Rosneft Trading SA, a unit of Russia’s state-owned oil giant Rosneft, as well as company’s executive Didier Casimiro, over the company’s actions in Venezuela, senior administration official said in call with reporters.The US accused Rosneft of propping up Venezuela’s oil sector, the admin official said, characterizing the company as the “primary culprit” of a campaign to evade Washington’s pressure campaign on the Maduro regime.As the US further details, the network of deception sometimes involves transferring oil to new ship before sale, typically to Asia. Occasionally, ships will also change their names, or lie about source of oil. As McClatchy details, “the administration has accused Rosneft of sending tankers to Venezuelan ports without their tracking systems on – a violation of international law and a lifeline from sanctions on Venezuela’s own state-run oil company, PDVSA, that has allowed Maduro to indirectly sell oil to China and India. Officials also said that Rosneft was orchestrating a strategy of transferring Venezuelan oil in international waters for shipment to Asia and West Africa.”US officials said that sanctions would hit Rosneft unit, as well as Casimiro’s U.S. assets but stand as worldwide prohibition, and warned that the new U.S. sanctions will affect “anyone engaging in activity” with Rosneft Trading S.A.”This is a reaction to the growing and increasingly central role of Rosneft in the affairs of Venezuela,” one senior administration official said, “with Rosneft now trading over half of the oil now coming out of Venezuela, and actively evading sanctions – engaging in ruses, engaging in deception.”White House officials acknowledged earlier this month that sanctions on the Russian state-run firm were “on the table.” But President Donald Trump’s decision to proceed marks a significant escalation in his pressure campaign against Maduro and a rare confrontation with Russia’s president, Vladimir Putin.

Denouncing the U.S., Venezuelan Troops and Militias Stage Drills – Venezuela’s armed forces and civilian militias took the streets in cities, beaches and border regions on Saturday for drills ordered by President Nicolfls Maduro, amid tensions between Washington and Caracas. Despite the maneuvers, there are no indications that the U.S. plans any military intervention in Venezuela. Washington has focused on political and diplomatic pressure in its efforts to oust Maduro, only saying last year that it had not ruled out a military option. Maduro called for the exercises as he comes under pressure from the U.S. and dozens of other nations backing a year-long campaign by opposition leader Juan Guaidó to force the leader from power. Residents in a pro-Maduro slum in Caracas participated in the exercises. They included a growing number of civilian militia members recruited by a cash-starved government that is struggling to keep Venezuela’s shattered economy afloat. “I answered the call to help prepare for our defense because my country, my homeland, is under threat from the U.S. empire,” said militia member Pablo Antonio Reyes, a 63-year-old electronics technician. Militiamen and government supporters dressed in red shirts held combat drills on streets blocked off by city buses. They evacuated residents from buildings as tires burned on rooftops to simulate fires from attacks. “The purpose of this exercise is to keep us prepared,” said militia member Carmen Ferrer, 50. Maduro said that the two-day maneuvers were aimed at fending off “terrorist aggression” by Washington and its allies in the region including neighboring Colombia. The Venezuelan military, which has received Russian support, deployed missile launchers, anti-aircraft batteries and radars in the streets. The government seeks to boost militia ranks, filled out by the old and young, housewives and students.

Argentina’s energy bust spawns ‘ghost town’ in prized Vaca Muerta – – Just weeks into his young administration, Argentina’s new president convened a meeting with executives from Chevron Corp, Royal Dutch Shell PLC and other oil companies in a bid to smooth things over with an industry which he had slammed as a candidate months before. Campaigning last year against the South American country’s former market-friendly president, Alberto Fernandez had said there was no point in Argentina having oil riches if “you have to let multinationals come and take it away.” In a fence-mending session Jan. 16, Fernandez apologized to energy executives for the mixed signals, according to an industry source with direct knowledge of the meeting. But Fernandez did not present a plan at that meeting, nor put forward his own thoughts, the source said, a sign that the new government had yet to settle on a course of action for ramping the Western Argentine shale deposit up to its full potential. “They know what they are supposed to do … but they don’t know what changes will make things better or worse,” said another official at a U.S. service provider who declined to be named, adding that he had “zero hope” that Fernandez’s promised bill would significantly improve the bleak outlook at Vaca Muerta. When asked about the government’s plan for the area and the meeting with executives, a spokesman for the energy secretariat said, “Vaca Muerta is central as a country project at a global level.” The success of Vaca Muerta, often compared to the Permian Basin in the United States based on its vast potential, is key for this South American nation that has failed for decades to break free of cyclical crises and is grappling with inflation above 50% and a $100-billion pile of sovereign debt. But more than a dozen interviews with energy executives, property developers, analysts and locals here in Añelo, considered the capital of Vaca Muerta, show how patience is running out for global energy giants including Halliburton Co and Schlumberger NV once committed to tapping the region’s reserves, as well as the thousands of Argentines trying to scratch out a living in a region that was bustling just 12 months ago.

2019: The Year Fracking Earthquakes Turned Deadly – On Feb. 25, 2019, an earthquake shook the village of Gaoshan in China’s Sichuan Province, leaving 12 people injured and two dead. New research indicates the earthquake and its two foreshocks were likely triggered by hydraulic fracturing, also called fracking. If this is true, it would mark the first time in history that a fracking-induced earthquake has killed people.The study shows why magnitude, the most common way of reporting earthquake size, could lead people to underestimate the true threat fracking-induced earthquakes might pose. The Feb. 25 earthquake was only a magnitude 4.9, which would not traditionally be considered very dangerous. But it was able to destroy older and more vulnerable buildings because it was so close to the surface — only about one kilometer deep according to the new study. That’s shallow even by fracking standards, but fracking-induced earthquakes do tend to be much shallower than natural ones.”The shallower it is, then for the same magnitude of earthquake, the stronger the shaking,” said Hongfeng Yang, a seismologist at the Chinese University of Hong Kong and senior author of the study. The findings are not yet published, but Yang and graduate student Pengcheng Zhou presented them last December at a meeting of the American Geophysical Union in San Francisco. Most fracking operations in North America don’t cause earthquakes, and the earthquakes that do occur have generally been small. Some media reports have attributed damaging earthquakes in Oklahoma to fracking, but experts believe most of those earthquakes were caused by wastewater that oil and gas developers disposed of by injecting it deep underground. Some of the wastewater included fluids used during the fracking process, but most of it came from ancient underground aquifers, according to Mike Brudzinski, a seismologist at Miami University in Oxford, Ohio. The oil beneath Oklahoma is naturally mixed with large volumes of water, and developers must filter out the water before they can sell the oil. Western Canada has experienced a few moderate-sized fracking earthquakes with magnitudes up to about 4.5, but they mostly occurred in remote locations far from major human settlements. And even in western Canada, only about one in 300 fracking operations causes earthquakes large enough for a person to feel, said Eyre.

Nigerias state oil company and partners spent $360 million on Delta cleanup: NNPC – (Reuters) – Nigeria’s state oil company and its joint venture partners have spent $360 million on cleaning up the Niger Delta oil heartland in the past two years, the Nigerian National Petroleum Corporation (NNPC) said on Monday, but locals said little work had been done. Nigeria is Africa’s biggest crude oil exporter. Oil sales account for around 90% of its foreign currency earnings but oil spills in the southern Niger Delta region have caused pollution and angered locals. Royal Dutch Shell Plc was forced out of Ogoniland in 1993 by campaigners led by activist Ken Saro-Wiwa, after they said the oil company had destroyed their fishing environment. Saro-Wiwa was later hanged by the military government, prompting international outrage. A 2011 United Nations report warned of catastrophic pollution in soil and water in Ogoniland. It said Shell and Nigeria’s government needed to address the problems. Shell paid a settlement of 55 million pounds to villagers and since then has said it has taken steps to improve the situation in the area, including training youths to start up businesses and funding community patrols to reduce pollution by vandals stealing oil. A cleanup process launched in 2017 followed years of legal wrangling in the wake of oil spills. Ewubare said the $360 million was out of a total $900 million recommended by the United Nations Environment Programme (UNEP). He said NNPC and it partners were ready to fund the project as prescribed by the UNEP report. But a number of locals questioned the impact of the operation. “What they are touting as a cleanup is substandard,” Christian Kpandei, a fish farmer whose land was polluted, said in an interview with Reuters. Morris Alagoa, of the Environmental Rights Action (ERA) campaign group, said he had seen little activity since the operation began. “I can’t say those handling the cleanup have actually started real work,” he said. But a photograph seen by Reuters taken in the last few weeks in Bodo, which sits in Ogoniland, showed men wearing overalls and hard hats beside boats, suggesting some activity.

South Sudan buries reports on oil pollution, birth defects– The reports, which date as far back as 2013, were presented to the oil companies and South Sudan’s ministry of petroleum but subsequently buried, according to four people with close knowledge of the oil operations and the documents.The oil industry in South Sudan has left a landscape pocked with hundreds of open waste pits, the water and soil contaminated with toxic chemicals and heavy metals including mercury, manganese, and arsenic, according to four environmental reports obtained by The Associated Press. The reports also contain accounts of “alarming” birth defects, miscarriages and other health problems among residents of the region and soldiers who have been stationed there. Residents describe women unable to get pregnant and having excessive numbers of miscarriages, and babies born with severe birth defects. Abui Mou Kueth’s infant son, Ping, was born with six fingers on both hands, one stunted leg, a deformed foot and kidney swelling. “I am worried about his future.” The AP obtained the reports and supporting documents from people with close knowledge of the oil operations, one of whom works in the industry. The reports have never been released publicly. The reports, which date as far back as 2013, were presented to the oil companies and South Sudan’s ministry of petroleum but subsequently buried, according to four people with close knowledge of the oil operations and the documents. All spoke on condition of anonymity for fear of their safety. “South Sudan is running one of the dirtiest and poorest managed oil operations on the planet,” said Egbert Wesselink, the former head of a European coalition of more than 50 non-profit organizations focused on the impacts of the country’s oil sector. “I don’t think there’s a single major industrial operation on earth that’s getting away with this,” he said. There’s been no clear link established between the pollution and the health problems. But community leaders and lawmakers in the oil-rich areas in Upper Nile and Unity states — in the northeast and north of the country bordering Ethiopia and Sudan — accuse South Sudan’s government and the two main oil consortiums, the Chinese-led Dar Petroleum Operating Co. and the Greater Pioneer Operating Co., of neglecting the issue and trying to silence those who have tried to expose the problem. An AP reporter looking into the pollution and health issues was detained and questioned by government officials and government security forces working on behalf of the oil companies. Neither company responded to multiple requests for comment on the reports, and did not answer detailed questions sent by email and text message from the AP.

South Sudan finally ready to clean up its oil pollution – Crude oil, key to boosting South Sudan’s economy, is destroying crucial pasture land, polluting water, and increasing birth defects. Now it’s finally bad enough for the government to take notice. Grass is black from oil spills, air is dark from pillars of black smoke, and layers of “black gold” cover water supplies. Mitigating the pollution in the East African, northern, crude-producing regions has been made a top priority and an audit is underway to locate contaminated areas and find ways to clean it up, according to petroleum and mining minister Awow Daniel Chuang. “Regulations will be used to save the environment; the policy will be for zero discharge,” he said in Juba this month. David Gai, a former information minister in what is now Unity state, said negligence and failure to inspect pipelines in a timely fashion is at the root of much of the problem. Company failures to enclose production sites is also a threat, said Abraham Ngor, a former state official in the Ruweng region. “The government has issued precautionary warnings to people to avoid living near these areas.” Birth defects are also a “big issue” for communities in his region but little details are available. “Investigations will help to find the exact cause,” Ngor said. Oil production is key to development in the world’s newest country that seceded from Sudan in 2011. It’s currently producing as much as 166,000 barrels per day (bpd), according to a government report released on Thursday. That compares with output of about 350,000 bpd before war broke out in 2013. More than five years of fighting claimed almost 400,000 lives, forced 4-million others from their homes and caused an economic crisis. Previous attempts to implement peace agreements have failed. Despite the environmental damage, the government is pressing ahead with plans to boost sales by increasing buyers and encouraging international investment. The country has announced plans to offer 14 oil exploration blocks during the first quarter of this year as it seeks new sources of production.

The World’s Top LNG Producer Is In Trouble – Global LNG markets are struggling with a glut of unprecedented levels. International expansion in Australia, Qatar, Mozambique and Egypt, combined with a continuously strong US shale gas export drive, is pushing down prices further. Analysts have warned before that a possible LNG glut could end in tears, but nobody was expecting that the market would also be hit by a demand side shock such as China’s coronavirus. The last couple of weeks, major LNG export cargoes to China have been diverted to other clients or are still looking for a destination in an already woefully oversupplied market.Major LNG producers such as Qatar or Egypt are feeling the pain already. During Egypt’s EGYPS2020, a major oil and gas conference, participants showed concern about the imminent future of the East Med gas hub, as new LNG export contracts still have not been signed and asking prices are unlikely to be met. Today’s announcement that Qatar has delayed its choice of Western partners for the world’s largest liquefied natural gas (LNG) project by several months isn’t going unnoticed. Without direct statements by Qatar Petroleum, sources have stated that the delay decision has been made based on current market fundamentals and the still unclear impact of the Corona virus. Qatar has been fighting an uphill battle as the market has been glutted by US shale gas exports and a drop in Chinese demand. International interest for the Qatar LNG expansion has been large, and among those interested were industry giants such as Shell and ExxonMobil . No list of interested parties has been issued by QP, but around six Western companies are believed to have shown interest. The market was expecting the announcement of its partners by QP in Q1 2020, but this will be delayed until later this year. Rationally the decision to delay is needed, as a 60% LNG production expansion by QP to reach a volume of 126 million tons by 2027 will be a real risk. At the same time, the coronavirus has put the total global market on edge. Demand for oil and gas is feared to be hit very hard, even when current demand figures of China and others are way above what some analysts have been expecting the last weeks. Lower prices have enticed Chinese fill up storage tanks. Still, if Chinese authorities fail to contain the virus, Asian economies could come to a partial standstill, which would gravely impact demand for transportation fuels and natural gas. Not only traditional LNG exporters, such as Qatar, or East Med producers like Egypt or Algeria, are being hit by the current glut. US shale gas exporters are now facing a major crisis too. Dreams about entering global strong markets with high price settings however have been destroyed, as due to an already existing gas glut, prices have been low already. US gas exports are now only contributing to the glut, pushing prices even further down. Booming U.S. exports combined with lower Asian demand is a major recipe for disaster, effecting most IOCs, but especially Shell, Total and ENI, as all have been concentrating their own investment and expansion strategies in natural gas. Some US producers, such as Chesapeake Energy are already fighting bankruptcy, and IOCs have been hit by a slump in profits.

India LNG buyers spoilt for choice as China woes create problem of plenty – Indian buyers are rushing to snap up LNG at relatively low prices as suppliers look for alternative markets amid the coronavirus epidemic that has sapped the appetite for cargoes in China, the world’s second-largest natural gas importer behind Japan. The South Asian nation has floated a series of import tenders as well as absorbed some of the diverted cargoes at attractive prices. However, analysts warned that although the Indian market has witnessed a sharp increase in interest for cargoes, infrastructure bottlenecks would limit the incremental volumes that India can absorb above and beyond its immediate needs, despite desperate sellers looking to close a deal. “India certainly represents an important market which could absorb some additional volumes,” said Jeff Moore, manager of Asian LNG Analytics at S&P Global Platts. “The new Mundra terminal was recently commissioned but has so far seen very low utilization rates. With new infrastructure available it’s possible that India could represent an important outlet for excess LNG,” he added. Moore reckoned that India’s imports were averaging roughly 15 Mcm/d higher so far this year compared with the same period in 2019. “This really demonstrates how important a growth market India is in the broader context. And as long as infrastructure continues to get built out and allow for additional volumes, it’s possible more LNG could head in that direction,” he added. One such LNG cargo, the Marvel Pelican, is currently heading to Dahej in India after having changed its destination from China, according to cFlow, Platts trade-flow software, and researcher Energy Aspects. And analysts said more diversions of cargoes towards India maybe in the offing in the near future. “We were already seeing price sensitive buyers in India buying more LNG as a result of record low LNG prices in recent months. This was happening even before the COVID-19 outbreak,” said James Waddell, senior global gas analyst at Energy Aspects. “The destruction of Chinese demand because of the virus and the resultant distressed LNG cargoes will further encourage Indian cargo buying. We are seeing a high number of LNG buying tenders from Indian firms at the moment,” he added.

India set to import record LNG volumes as spot prices slump on virus impact – (Reuters) – India is set to import record volumes of liquefied natural gas (LNG) this month, data shows, taking advantage of the super-chilled fuel’s price hitting all-time lows due to the coronavirus outbreak dampening demand in China. The South Asian nation is estimated to import about 2.36 million tonnes in February, shiptracking data from Refinitiv Eikon showed. That would exceed India’s LNG imports in October of about 2.3 million tonnes, the previous highest monthly total. The country’s annual LNG imports is expected to rise by 10%-15% this year, said Poorna Rajendran of consultancy firm FGE. “The low spot prices are creating some downstream demand especially from the city-gas sector,” a source familiar with LNG imports into India told Reuters. India regasifies LNG and uses it primarily in the city-gas distribution, fertilizer, power and industrial sectors. Asian spot LNG prices LNG-AS fell to a record low this month after China’s top LNG buyer declared force majeure on some LNG deliveries following the coronavirus outbreak. That prompted some of the cargoes bound for China to be diverted to India and also some Indian buyers to issue tenders seeking spot cargoes, traders said. Some of them are even seeking cargoes for several months, they added. For instance, Reliance Industries issued a tender seeking five cargoes for April to June delivery while Gujarat State Petroleum Corp (GSPC) sought nine cargoes for February to April, traders said. GSPC likely did not award the tender, however, and may have re-issued it, the traders said. The potential uptick in demand also likely prompted Emirates National Oil Company (ENOC) to issue a tender seeking eight cargoes for delivery into India over April to November, the traders said. Infrastructure constraints, however, will limit LNG purchases by buyers in India, FGE’s Rajendran said.

India’s Upside for Oil Demand Seems Unlimited – With almost 1.4 billion people, India remains the most energy-deprived nation on Earth. The upside for demand seems almost unlimited. India has 635 million people under the age of 24. This is a burgeoning young population the size of the total populations of the U.S., Japan, Germany, France, and Canada. Coal will remain the main source of energy, but the proven global reality that demand mounts as human development progresses makes India’s oil usage unidirectional: up. Today, oil accounts for 25 percent of India’s total energy demand, rather high for a still developing country. The latent demand, however, is just staggering. Indians use less than 0.2 gallons of oil products per day, versus 2.6 gallons for the U.S. Even though it has almost 11 times more people, India overtook Japan only in 2015 to become the world’s third largest oil consumer after the U.S. and China. Over the past decade, China (45 percent) and India (20 percent) have accounted for the bulk of new global oil demand. Driven by more diesel fuel, gasoline, and LPG, India could race past China to become the world’s primary new consumer within five or seven years. For those claiming “the end of oil,” the truth is that the world’s most vital fuel has no material substitute whatsoever. Electric transport, for instance, is overly expensive here in the rich U.S., let alone for a still developing country where 70 percent of the people subsist on biomass. Dreaming of the same luxuries that Westerners enjoy, gas-guzzling SUVs now comprise 35 percent of all car sales in India. An essential part of India’s growing oil usage has come from lower prices for petroleum and its products. After all, India has an annual GDP per capita of just $2,300, versus a whopping $55,300 for the U.S. The government has typically regulated costs but the expensive habit has been phasing these subsidies out. At the end of January, for instance, GlobalPetrolPrices reported India’s gasoline price at $1.07 per liter (interestingly, the exact price of China’s), well above the $0.75 per liter for the U.S. India has been steadily preparing for the oil demand boom. Refining capacity has been growing 5-6 percent per year over the past decade to above 5 million b/d. Bolstered by major private sector investment, India now has several world-class refineries. For example, Reliance Industries’ Jamnagar complex in Gujarat might be the most advanced refinery in the world. India though is a persistent low crude producer holding less than five billion barrels of proven reserves. With rising demand amid flat production, India has therefore continually turned to the global market to fill the gap (see Figure). Since 2010, import dependence has risen from 70 percent of total consumption to 85 percent. While India’s NOCs have sought to diversify with equity stakes overseas, most oil imports come from the Middle East, where there is little direct access to investment.

Oil Demand Growth to Quintuple Next Year – Global oil demand growth will drop to 0.44 million barrels per day (MMbpd) this year but rebound to 2.34 MMbpd in 2021. That’s according to a new research note from Standard Chartered, which outlined that the company’s latest modelling shows a reduction of 2020 demand growth of 793,000 barrels per day relative to its pre-coronavirus base case.The note highlights that growth of 0.44 MMbpd would be the slowest annual growth since 2009. Demand growth of 2.34 MMbpd would be the second strongest annual growth in the past 15 years, Standard Chartered noted.“We see the demand shock as temporary; there is no demand destruction, simply a short-term dampening,” Standard Chartered analysts stated in the research note.“We expect demand to return to its previous trend in 2021,” the analysts added.Standard Chartered lowered its 2020 Brent forecast by $6 per barrel in its latest research note to $64 per barrel. The company’s average 2020 WTI forecast was lowered by $5 per barrel to $59 per barrel.Following the coronavirus outbreak, Fitch Solutions Macro Research (FSMR) also revised down its Brent oil price forecast for 2020. FSMR now sees Brent averaging $62 per barrel this year, which marks a $3 drop compared to its previous forecast in January.Rystad Energy revealed last week that it had slashed its global oil demand growth forecast for 2020 by 25 percent after assessing the impact of the coronavirus. The company now sees demand growing by 820,000 barrels per day (bpd) this year, compared to its previous forecast of 1.1. million bpd, which was published in December before the virus outbreak. Rystad has warned, however, that the virus’ impact on demand could be even bigger and revealed that its worst-case scenario sees growth plunging to 650,000 bpd year on year.

Wishful Thinking – OPEC Drastically Underestimates China Virus – A comparison of the latest forecasts from the world’s three big oil agencies – the International Energy Agency, the U.S. Energy Information Administration and the Organization of Petroleum Exporting Countries – highlights the huge uncertainty that exists over the virus’s repercussions for oil demand. As may be expected for a body representing oil producers, OPEC sees the impact as minimal, having just cut its first-quarter forecast for global oil demand by only 400,000 barrels a day. That looks like wishful thinking. The IEA’s revision is three times as big, and if its forecast bears out, it’s deep enough to tip the world into its first year-on-year drop in demand in more than a decade. The IEA has slashed its 1Q20 global oil demand forecast by 1.3 million barrels a day – three times as much as the revision made by OPEC China’s own oil consumption is down sharply as factories stay closed and travel restrictions remain in place even after the extended Lunar New Year holiday comes to an end. Congestion on roads in major cities is far below normal levels. The chart below shows journey times in Shanghai, and other Chinese cities mirror that pattern. My colleagues at BloombergNEF estimate that China’s jet fuel use is now down by 240,000 barrels a day from pre-virus levels, with departures from Chinese airports down by around 80%. Roads in Shanghai remain empty even after the extended Lunar New Year holiday ends; the pattern is similar in other cities Pollution statistics also capture the slowdown in economic activity and fuel use – something that under different circumstances might be reason to celebrate. China’s nitrogen dioxide emissions fell 36% in the week after the holiday from the same period a year earlier, according to the Centre for Research on Energy and Clean Air. A slowdown of 25%-50% across industrial sectors such as oil refining, coal-fired power generation and steel production contributed to the drop, according to the independent research organization. However, even as the Covid-19 virus hits consumption, the number of very large crude carriers hauling cargoes to China has risen. That’s because independent refiners are taking advantage of the drop in crude prices to fill their storage tanks with cheap cargoes, even as they cut run rates. That’s to some extent cushioning producers now. But those stockpiles will hit future demand for crude from China’s teapot refineries, even after the immediate effect of the virus dissipates. At the same time, the Chinese government is in the process of building and filling a strategic stockpile similar to the U.S. Strategic Petroleum Reserve, as it becomes ever more dependent on imported supplies. It may also be using the price drop to boost purchases for long-term storage, raising the risk that it will cut them again as prices recover, crimping demand for imported oil in the future. By contrast, China’s state-owned processors are seeking to reduce the volumes supplied under term contracts. Even with reduced refinery runs, China is producing more fuel than it needs. Exports of gasoline and diesel have soared, according to shipping intelligence firm Vortexa. But they aren’t finding ready buyers. Most of these additional fuel exports are ending up in storage tanks in Singapore amid subdued regional demand. In that light, OPEC’s forecast that global oil demand will be cut by just 440,000 barrels a day in the first quarter and by 230,000 barrels a day over the year as a whole looks like wishful thinking on the part of producers. It is doing them no favors, though. A delay in reducing supplies will only make the cuts needed later even deeper.

Corona Virus Hits Oil Demand and Prices – The full impact of the corona virus – which has infected about 14,000 people and killed over 400 (as of Feb. 4) — on world oil and gas markets is only slowly becoming clear. The cancellation of flights within, into and out of China is cutting jet fuel demand in China and around the world, while Chinese refiners are experiencing a sharp fall in demand for diesel and gasoline from industry and transport sectors as travel bans continue and economic activity slows. The economic fallout could produce a wider regional impact on demand across east Asia, and if there is any widespread infection elsewhere, the impact will be even greater – the World Health Organisation declared an international emergency on Jan. 30th but does not yet see it as a global pandemic. All this has sent oil prices tumbling, despite heightened tensions in the Mideast, a tightly adhered-to OPEC-plus deal and the shut-in of about 1mn b/d of Libyan output due to civil unrest. Brent has moved into contango (where forward prices are higher than current levels) as prompt demand weakens, and analysts around the world are slashing demand forecasts for 2020. Product prices are also taking a hit as demand falls, narrowing crack spreads and refining margins, especially in Asia. LNG prices too, already at record lows, are coming under further downward pressure. “The ongoing coronavirus outbreak and subsequent large-scale quarantine measures are posing a major economic risk to China and beyond,” said Yujiao Lei of Wood Mackenzie, with jet fuel (currently with demand of about 8mn b/d globally) hardest hit. She said the experience during the 2003 SARS outbreak suggested a severe and one-off impact on jet fuel demand and, to a lesser degree, gasoline and diesel. But the corona outbreak already looks to be more damaging than SARS, with travel and economic activity (which is far higher in China now than in 2003) more severely hit and considerable uncertainty as to when the situation might improve; Hubei Province, where the disease epicentre of Wuhan is located, alone accounts for over 4% of China’s GDP and remains in lockdown, with other restrictions in place across the country and no clear idea of when such measures will end. Early Feburary reports suggested a fall in Chinese demand of 20% in January, equating to 2-3mn b/d or 2-3% of global demand. That could be higher still in February and if sustained would put further downward pressure on crude prices.

Oil prices bounce on hope for short coronavirus downturn (Reuters) – Hedge funds continued selling petroleum last week as fears about a coronavirus-driven recession centred on China gripped the market, but the rate of sales slowed compared with the previous fortnight. Hedge funds and other money managers sold the equivalent of 74 million barrels in the six most important petroleum futures and options contracts in the seven days ending on Feb. 11 (tmsnrt.rs/2OYesZS). But sales were slower than in the week ending Feb. 4 (131 million barrels) and the week ending Jan. 28 (147 million), according to position data from regulators and exchanges. Portfolio managers have sold a total of 440 million barrels over the last five weeks, substantially reversing cumulative purchases of 533 million over the previous three months. Funds were sellers last week of Brent (69 million barrels), NYMEX and ICE WTI (15 million) and European gasoil (around unchanged). But there were net purchases of both U.S. diesel (4 million) and U.S. gasoline (7 million). Overall, the last time the hedge fund community was this bearish towards petroleum was in early October, and before that January 2019, when concerns about a U.S./China trade-war driven recession were at their highest. Fund managers hold less than three bullish long positions for every bearish short one, down from a recent peak ratio of almost 7:1 at the start of the year. The ratio of long to short positions is towards the bottom of the range for the last four years, currently in the 19th percentile for all weeks since the start of 2016. Most of the bullish positions accumulated in the last quarter of 2019 in anticipation of a cyclical economic upswing and faster oil consumption growth in 2020 have now been liquidated. The liquidation seems to have been mostly completed by the start of last week and it has been followed by a $4 per barrel rally in Brent prices. From a positioning perspective, the distribution of risks had shifted to the upside by the start of last week, with the potential for a significant increase in bullish positions and prices if the coronavirus outbreak is brought under control and China’s business activity returns to near normal.

Short Selling In Oil Slows After Initial Coronavirus Panic – Money managers continued to liquidate long positions in the petroleum futures last week, but the pace of rising shorts has slowed after the early market panic about the impact of the coronavirus outbreak on oil demand. Portfolio managers reduced their net long position – the difference between bullish and bearish bets – on WTI Crude by 7 percent in the week to February 11, according to the latest data from the U.S. Commodity Futures Trading Commission, as carried by Bloomberg. Despite a slowdown in shorts on WTI, the overall positioning in the contract remains the most bearish since November, according to Bloomberg estimates. In the week to February 11, money managers sold the equivalent of 74 million barrels in the six most important petroleum contracts, exchanges data compiled by Reuters market analyst John Kemp showed on Monday. Hedge funds were still net sellers of oil futures last week, but the pace of selling has slowed after the panic-selling in the two previous weeks.In the week to February 11, the combined net-long position in WTI Crude andBrent Crude was cut by 78k lots to a three-month low at 406k lots, or the equivalent of 406 million barrels, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Monday.“Since the January 10 peak at 714k lots the combined net-long has now been cut by 43% on a combination of the gross-short rising by 90% to 212k lots while the gross-long has been cut by 25% to 618k lots,” Hansen noted. Speculators continued to liquidate their longs over the latest reporting week through last Tuesday, ING strategists said on Monday.“Given the rally in the market since last Tuesday, the current net-long is likely larger than it was as of last Tuesday,” ING strategists Warren Patterson and Wenyu Yao said. Last week, oil prices recorded their first weekly gain since early January as the market shook off the coronavirus panic and hoped for a Chinese stimulus in case the virus outbreak considerably slows down the economy. Yet, market sentiment is still bearish given the coronavirus hit to oil demand this quarter.

Fading Hope for Emergency OPEC Meeting Caps Oil Rally – Oil was steady after the biggest weekly gain since September as hopes for an OPEC+ emergency meeting on the virus faded, while investors assessed Chinese stimulus measures to soften the outbreak’s economic impact. While Saudi Arabia hasn’t given up on its push for the gathering this month, OPEC and its allies are likely to stick with a scheduled meeting in March after Russia balked at the idea. China, Hong Kong and Singapore have pledged extra fiscal stimulus to counter the economic hit from the deadly coronavirus, with Beijing considering measures such as lowering corporate taxes. While Brent oil rallied by more than 5% last week amid speculation that the worst economic impacts of the virus may have been accounted for, Goldman Sachs Group Inc. slashed its 2020 crude-demand forecast almost in half and lowered its first-quarter price estimate by 16%. Sentiment remains cautious with Hubei, the Chinese province at the epicenter of the outbreak, reporting new cases and additional deaths. “What we saw last week was cautious optimism that the coronavirus spread could no longer be worsening, or could be contained within China,” “But that cautious optimism is not enough for crude to recover all the ground it has lost.” Brent for April settlement lost 3 cents to $57.29 a barrel as of 7:39 a.m. in London on the ICE Futures Europe exchange after falling as much as 0.9% earlier. The contract advanced 5.2% last week. The global benchmark crude traded at a premium of $4.94 to West Texas Intermediate. WTI for March delivery added 5 cents to $52.10 a barrel on the New York Mercantile Exchange. The contract rose 3.4% last week, the biggest weekly gain since December. Russia has resisted Saudi Arabia’s efforts for a swift response to the virus, even after an OPEC+ committee recommended additional collective cutbacks of 600,000 barrels a day – on top of the 2.1 million already being made. Global oil demand is expected to decline this quarter for the first time in more than a decade, according to the International Energy Agency.

Oil Snaps Rally as Investors Assess Virus Measures — Oil snapped the longest run of daily gains this year as investors assessed the demand hit from the coronavirus and stimulus measures being rolled out to cushion its economic impact. Markets are overconfident in expecting a v-shaped recovery and oil prices are likely to remain weak during the first half of the year, according to Citigroup Inc. China has pledged a raft of fiscal stimulus measures, while Singapore will boost spending to counter the slowdown in tourism and trade. The outbreak has curbed travel and hit supply chains across the world, with Chinese refineries continuing to trim processing rates and Apple Inc. saying it won’t be able to meet its revenue guidance for the March quarter due to work slowdowns and lower smartphone demand. Brent oil rallied the past five days amid optimism the worst economic impacts had been accounted for. “Markets are taking a view that this will be a temporary deferral of demand, rather than destruction,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “I don’t agree. I think, the destruction of demand will be significantly higher than the market is pricing at the moment.” Brent for April settlement lost 89 cents, or 1.5%, to $56.78 on the ICE Futures Europe exchange as of 7:54 a.m. in London after closing 0.6% higher on Monday. The global benchmark crude trade at a premium of $5.12 to West Texas Intermediate for the same month. WTI futures for March delivery traded 72 cents lower from Friday’s close at $51.33 a barrel. There was no settlement Monday due to the Presidents Day holiday in the U.S. The supply-chain recovery in China could be problematic despite the stimulus pledge from Beijing, Citigroup analysts including Edward Morse said in a note to clients. Total Chinese product demand may drop by about 3.4 million barrels a day in February and average 1.5 million barrels per day in the first quarter.

Tankers, Tankers. Everywhere! – Virus Causes Historic’ Traffic Jam’ Across Asian Supply Lines – Covid-19’s effect on global energy markets has been disastrous. OPEC slashed its oil demand forecast last week, and Goldman Sachs doubled down on its bearish oil take and has cut its oil price target by $10 to $53 for the year, as a result of a “demand shock” that is set to collapse Chinese oil consumption by 20%, or as much as 4 million barrels per day.The sharp decline in demand in China, which by the way, is the world’s largest oil importer, is now stranding oil cargoes off the country’s coast and across Asia. Bloomberg’s Stephen Stapczynski records footage of an impressive parking lot of tankers and other vessels off the coast of the anchorages of the port of Singapore, one of the largest freight hubs and busiest ports in the world. Tankers… tankers everywhere.#singapore pic.twitter.com/RCEysNtDKo – Stephen Stapczynski (@SStapczynski) February 15, 2020Much of the oil consumption decline is because, as we reported on Friday, China’s economy is faltering as its industrial hubs remain shuttered.Take a look at the chart below, in the Feb 7-13 week, steel apparent demand is down a whopping 40%, but that’s only because flat steel is down “only” 12% Y/Y as some car plants have ordered their employee to return to work. Real-time measurements of air pollution (a proxy for industrial output), daily coal consumption (a proxy for electricity usage and manufacturing), and traffic congestion levels (a proxy for commerce and mobility) suggest that the second-largest economy in the world has frozen. This all indicates the demand for energy products to power machines and vehicles has abruptly stopped.A significant bottleneck for Very Large Crude Carriers (VLCCs) deliveries to China is developing, forcing some ports to reject new tanker loads, contributing to a parking lot of tankers sitting off the coast and in other regions in Asia. Some cargos have been diverted to Singapore, Malaysia, South Korea, but even in those regions, tanker traffic jams are building. Crude storage in China filled up near full capacity last summer, mostly due to declining demand thanks to a decelerating economy. China’s overall crude storage is around 760 million barrels, versus a peak of 780 million barrels last June. Middle East traders who export crude via VLCCs to China reported weaker demand. VLCC rates from the Middle East to China have plunged since the virus outbreak began early last month.

Coronavirus creates oil ‘contango’ as supertanker rates dive (graphs) The coronavirus outbreak has stunned commodity markets, sending oil prices lower and disrupting the global shipping industry. Weaker demand for raw materials in China has caused Brent crude, the international benchmark, to fall more than 10 per cent in less than a month to about $57 a barrel. It has also pushed rates for oil-carrying supertankers down by three-quarters to about $23,000 a day. Spot market prices for oil fell so much in February that they briefly became cheaper than contracts for delivery in six months’ time, a phenomenon known as “contango” that usually indicates a heavily oversupplied market. That can create a trading opportunity for commodity houses, which have reportedly inquired with shipowners about hiring vessels to use as floating storage. But market-watchers think a big uptick in the number of ships used for floating storage by those seeking trading profits is unlikely, unless coronavirus fears send spot prices even lower from here. Instead, brokers say, traders are now more interested in ship-to-ship transfers, moving oil from tankers chartered at high rates to cheaper ones. Tanker prices surged between October and January, because of US sanctions levelled against units of Cosco, China’s largest tanker owner. Traders were chartering supertankers – very large crude carriers (VLCC) that can carry 2m barrels of oil – for $100,000 a day at the height of the market.

Oil Stalls After Rosneft Sanctions Offset Virus-Led Demand Fears – Oil ended Tuesday’s session flat after American sanctions on Russia’s largest oil producer helped to erase losses driven by lingering concerns that coronavirus will cut demand. The U.S. sanctioned a unit of Russia’s Rosneft PJSC for maintaining ties with Venezuela’s Nicolas Maduro and its state-run oil company. The restrictions come with a three-month wind-down period that expires May 20. “These sanctions will be supportive for prices,” said Phil Flynn, senior market analyst at Price Futures Group. “Ultimately, Russia does not want to be on the wrong side of the energy trade.” Futures end flat after recovering on the back of Rosneft sanctions The sanctions on Rosneft represent the latest effort by the U.S. government to increase pressure on Nicolas Maduro’s regime. Rosneft called the sanctions illegal and ungrounded. The tensions also come at a time when oil markets are awaiting a response from OPEC+ on production cuts. Russia, one of the largest exporters in the coalition, has been reluctant to curb oil output past the current production cuts. Prices have lost about 15% since the beginning of the year on fears the coronavirus outbreak will squeeze global demand for crude. While China reported the lowest number of new cases since announcing a change in its method of detection last week, the outbreak continues to weigh on commodities. ING Bank NV cut its Brent and WTI oil forecasts, with oil demand set to remain weak due to the outbreak, analyst Warren Patterson wrote in a report. West Texas Intermediate futures for March delivery settled at $52.05 a barrel on the New York Mercantile Exchange. There was no settlement Monday due to the Presidents’ Day holiday in the U.S.

Oil settles unchanged, paring early losses – Oil prices were little changed on Tuesday, pressured by concerns over the impact on crude demand from the coronavirus outbreak in China and a lack of further action by OPEC and its allies to support the market. Brent crude was up 8 cents at $57.75 per barrel. U.S. West Texas Intermediate crude futures settled unchanged at $52.05. Earlier in the session WTI fell to a session low of $51.15 per barrel. Though new cases of the coronavirus in mainland China have dipped, global experts said it was too early to judge if the outbreak is being contained. Forecasters including the International Energy Agency (IEA) have cut 2020 oil demand estimates because of the virus. “While the coronavirus remains as a latent bearish consideration capable of sharply reducing Chinese oil demand, estimates as to the extent of demand deterioration still vary widely with any definition still weeks if not months away,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note. The virus is having a wider impact on financial markets. Asian shares fell, while Wall Street also was retreating after Apple Inc said it would miss quarterly revenue guidance due to slower iPhone production and weakened demand in China. The IEA last week said first-quarter oil demand was likely to fall by 435,000 barrels per day (bpd) from a year ago. The Organization of the Petroleum Exporting Countries (OPEC) and allied producers including Russia have been considering further production cuts to support prices. The group, known as OPEC+, has a pact to cut oil output by 1.7 million bpd until the end of March. OPEC+ oil ministers will meet in Vienna on March 6 as initially planned, a senior Russian energy ministry official said on Tuesday. The group will consider an advisory panel’s recommendation to cut supply by a further 600,000 bpd. OPEC has been trying to persuade Russia on the deeper cuts, and Moscow has said it will disclose its stance in the coming days.

Oil Prices Rise Amid Sanctions on Rosneft, But Virus Fears Cap Gains – Oil prices gained more than 1% on Wednesday in Asia despite ongoing concerns surrounding the coronavirus outbreak. U.S. Crude Oil WTI Futures gained 1.1% to $52.86 by 12:01 AM ET (04:01 GMT), while the international Brent Oil Futures also rose 1.1% to $58.39. Reports that the U.S. imposed sanctions on a unit of Rosneft, Russia’s largest oil producer, were cited as a tail wind for oil markets today. The restrictions come with a three-month wind-down period that expires May 20. Washington said Rosneft have maintained ties with Venezuela’s Nicolas Maduro and its state-run oil company, while the Russian producer called the sanctions illegal and ungrounded. “These sanctions will be supportive for prices,” said Phil Flynn, senior market analyst at Price Futures Group. “Ultimately, Russia does not want to be on the wrong side of the energy trade.” Gains of oil prices were capped by lingering concerns about lowered demand due to the virus outbreak that started in China. The Hubei province reported 132 deaths for Feb. 18. So far, China has 74,186 confirmed cases of the virus, according to government data. While the new cases in Hubei fell for a second day, the World Health Organization earlier cautioned that it was too earlier to know if the epidemic was being contained.

Oil up 2% on Libyan Squeeze, Saudi Call for OPEC ‘Fire Brigade’ – What should have mattered long ago to crude prices – a supply squeeze in Libya – is finally kicking in, extending the market’s rebound from oversold conditions. Adding to the upside were Saudi remarks likening China’s viral pandemic to a “burning house” that needed a “fire brigade” like OPEC to put out and U.S. sanctions on a unit of Russian energy firm Rosneft for its alleged support of Venezuela’s government. West Texas Intermediate, the U.S. crude benchmark, settled up $1.20 Wednesday, or 2.3%, at $53.49. Brent, the global benchmark for crude, settled up $1. 37, or 2.4%, at $59.12 per barrel. Wednesday’s rally extended a rebound that began last week after five previous weeks of losses in WTI and Brent. While some of the surge could be attributed to higher risk appetite across markets due to reduced worries over China’s viral pandemic, much of the gains had to do with the shutdown in Libyan crude supplies. Libya has Africa’s largest oil reserves and is caught in decade-old factional fighting for power that erupted after the fall of dictator Muammar Gaddafi. Ceasefire talks in the Libyan civil war broke down amid reports that the Libyan National Army, led by renegade General Khalifa Haftar, had destroyed a Turkish ship in the Port of Tripoli, which it said was carrying weapons and ammunition. “The oil market is starting to realize that as bad as the demand destruction is from the coronavirus, the lack of exports from Libya might be meeting the oil demand destruction barrel for barrel,” said Phil Flynn, analyst at Chicago’s Price Futures Group. “Libya was exporting 1.2 million barrels a day,” Flynn said. “That is more than the demand destruction estimates of about 400,000 barrels a day to about 1 million a day. Whatever the real demand destruction is, it’s clear that Libya is offsetting a lot of that and after years, the odds of Libya oil exports coming online have gone down dramatically.” Saudi Energy Minister Prince Abdulaziz bin Salman, meanwhile, likened the impact of China’s Covid-19 crisis on oil as a house on fire that needed urgent OPEC intervention, Bloomberg reported. The Saudis and the rest of OPEC have proposed a 600,000-barrels per day supply cut to mitigate lost demand from the virus, but key ally Russia isn’t agreeing to the plan yet. On the sanctions side, the Trump administration targeted a unit of Russia’s Rosneft PJSC for maintaining ties with Venezuela’s Nicolas Maduro and its state-run oil company. The restrictions come with a three-month wind-down period that expires May 20. Though the sanctions don’t really impact day-to-day trades in crude, they added to the geopolitical tensions in oil, boosting prices.

Oil Futures Settle Sharply Higher – Crude oil prices rose sharply on Wednesday as concerns about the outlook for energy demand eased after reports said the number of coronavirus cases fell down for a second straight day in China. Expectations that the Organization of the Petroleum Exporting Countries (OPEC) and allied producers will deepen output cuts, and the U.S. decision to cut more Venezuelan crude from the market contributed as well to the rise in crude oil prices. West Texas Intermediate Crude oil futures for March ended up $1.24, or about 2.4%, at $53.29 a barrel. Brent crude oil futures climbed up $1.58, or about 2.7%, to $59.33 a barrel. On Tuesday, WTI crude oil futures ended flat at $52.05 a barrel. The U.S. has sanctioned Rosneft PJSC, a unit of Russia’s largest oil producer, for maintaining ties with Venezuela’s Nicolas Maduro and state-run oil company PDVSA. The move representing the latest escalation in the Trump administration’s campaign to oust Maduro and rally international support behind Venezuelan opposition leader Juan Guaido raised concerns over supply. According to the National Health Commission, mainland China had 1,749 new confirmed cases of coronavirus infections on Tuesday, down from 1,886 cases a day earlier and the lowest since Jan. 29. Expectations that the Chinese central bank will cut its benchmark loan prime rate on Thursday to offset the economic damage caused by coronavirus outbreak raised hopes about a likely increase in energy demand from China.

Factbox: Oil rebound extends, but LNG, jet remain bearish as coronavirus blunts demand – Oil prices climbed for a seventh straight session Wednesday as buying interest from Chinese refineries tempered long-term coronavirus demand destruction concerns, but jet fuel cracks and LNG prices were still lower amid weak prompt demand outlooks. Crude prices have steadily climbed off of a February 10 nadir, the date when most Chinese factories were slated to restart after an extend Lunar New Year holiday, but were still holding well under recent highs seen on January 20, when news of the outbreak began to take hold of the market. Dated Brent was assessed by S&P Global Platts at $59.61/b Thursday, up $6.495 from a February 10, but still 7% below its January 20 peak. Globally, the number of confirmed cases has risen to 75,205 with 74,188 of those in China, according to the Johns Hopkins University. At least 2,014 deaths have been attributed to the outbreak worldwide. Travel restrictions were still preventing some employees from returning to work Thursday and factories expected only partial production restarts, with some delaying a return to operations until late February or early March. Airlines have canceled flights, reducing jet fuel demand.

OPEC Confirms Meeting Date, Ends Saudi-Russia Scuffle — OPEC sent out invitations for meetings between the cartel and its allies on March 5 and 6, delegates said, signaling that plans for an emergency gathering have faded away. The 23-nation coalition known as OPEC+ had already scheduled the conference for early March when it last assembled in December. Saudi Arabia has been pushing for weeks for an earlier meeting of the Organization of Exporting Countries and its allies with Energy Minister Abdulaziz bin Salman this week equating the coronavirus’s impact on the market to a house on fire. Russia — the most important ally in the broader alliance — has resisted the initiative, saying that more time is needed to assess the impact of the disease. The invitations distributed this week confirm that the gathering will take place on the originally scheduled dates. It appeared earlier this month that the move for action was accelerating, as OPEC+ convened an urgent session of technical experts in Vienna, who recommended that the producers deepen current cutbacks by 600,000 barrels a day. The coalition is already implementing just over 2 million barrels a day of output curbs to shore up prices in the face of soaring U.S. shale-oil supplies. However, the proposal to cut deeper hasn’t yet received backing from Russia, which is able to weather low oil prices more easily than Persian Gulf producers. Oil traders will now have to wait until early March to see whether the alliance goes ahead with any new measures.

Supply Risks Push Crude Back Toward $60— Oil jumped back above $58 a barrel and was set for the longest run of gains in more than a year as U.S. sanctions on Russia’s largest producer and conflict in Libya shifted the focus to supply threats from virus-driven demand concerns. The U.S. sanctioned a unit of Russia’s Rosneft PJSC for maintaining ties with Venezuela’s president and its state-run oil company, threatening to crimp the nation’s ability to export crude. In Libya, fighters loyal to eastern military commander Khalifa Haftar shelled Tripoli’s port, forcing a halt to shipping and leading to the suspension of cease-fire talks. Oil is extending its longest rally since January 2019 after surging last week on optimism that the worst economic impacts of the deadly coronavirus had been accounted for. Any disruptions to global supply could go some way to offsetting the demand destruction from the outbreak, just as China and other nations in Asia roll out stimulus packages to cushion the blow. Rosneft’s sanctioned unit has been “Venezuela’s primary conduit for brokering cargoes, which find their way predominantly to refineries in India and China,” Stephen Innes, Asia Pacific market strategist at AxiCorp, said in a note. “Throttling this Asian supply channel will provide some support for oil prices.” Brent for April settlement climbed 53 cents, or 0.9%, to $58.28 on the ICE Futures Europe exchange as of 7:36 a.m. in London after gaining more than 8% in the past six sessions. West Texas Intermediate for March delivery added 57 cents, or 1.1%, to $52.62. Rosneft Trading, the main exporter of Venezuelan crude, was targeted by the U.S. for helping to sell the commodity that bankrolls the regime of President Nicolas Maduro. The sanctions come at a time when markets are waiting for a response from Russia on OPEC+’s proposal to deepen output cuts due to the coronavirus.

Oil Sees Three-Week High on Venezuela and Libya Supply Risks— Oil climbed to the highest level this month as U.S. sanctions on Rosneft Trading and mounting tensions in Libya threatened global crude supply. Futures advanced 2.4% in New York on Wednesday. Venezuela’s ability to export crude is in jeopardy after the U.S. sanctioned a unit of Rosneft PJSC, the country’s main oil shipper, for ties with Nicolas Maduro and the state-run oil company. Meanwhile, Libya’s cease-fire talks were suspended after the capital’s port was shelled by forces loyal to military commander Khalifa Haftar, who has forced a blockade of the country’s crude exports. “It’s a big turnaround,” said Mike Hiley, head of OTC energy trading with LPS Partners. “There’s no doubt the market is getting a lift from Libya and sanctions.” Geopolitical tensions are rising against the backdrop of the coronavirus outbreak, which has hurt global energy demand. The Organization of Petroleum Exporting Countries sent invitations for a meeting between the cartel and its allies on March 5 and 6, signaling that plans for an emergency gathering to address the epidemic have faded away. West Texas Intermediate for March delivery advanced $1.24 to settle at $53.29 a barrel on the New York Mercantile Exchange. Brent for April settlement climbed $1.37 to settle at $59.12 a barrel on the ICE Futures Europe exchange, putting its premium over WTI at $5.63. The structure of the futures market is also showing signs of tightening. Brent’s prompt spread rose 16 cents to its strongest level this month, signaling concerns of oversupply may be easing. The attack in Tripoli is the latest escalation between Haftar and the internationally recognized government. A blockade of the country’s ports in mid-January caused crude output to fall to around 123,000 barrels a day from 1.2 million a day.

WTI Extends Gains Despite Bigger Than Expected Crude Build – Oil climbed to the highest level this month amid U.S. sanctions on Rosneft Trading and mounting tensions in Libya threatened global crude supply and the ongoing optimism that the peak impact of the virus on China demand is behind us.“It’s a big turnaround,” said Mike Hiley, head of OTC energy trading with LPS Partners. “There’s no doubt the market is getting a lift from Libya and sanctions.”However, another big crude build will wipe some of that smile off the markets. API:

• Crude +4.2mm (+2.5mm exp)
• Cushing +400k
• Gasoline -2.7mm (+400k exp)
• Distillates -2.6mm (-1.5mm exp)

This is the 4th weekly crude build in a row (and bigger than expected)… WTI traded up to three-week highs today hovering around $53.50 ahead of the data And extended gains despite the bigger than expected crude build…

WTI Extends Longest Win Streak In 13 Months On Weak Crude Inventory Build -Oil prices continued to surge overnight, despite a bigger than expected crude inventory build reported by API. Up 7 days in a row, WTI has topped $54 on signs of tighter global supply and hopes that Chinese economic stimulus will cushion fuel demand from the impact of the coronavirus.“The recent bounce-back in oil prices has been driven by a combination of sentiment and supply factors,” said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA.“There’s a slower pace of growth in U.S. shale basins, the threat to Venezuelan production, and no apparent resolution to the situation in Libya.” We suspect another big crude build from the official data today will take the shine off this resurgence… DOE:

• Crude +415k (+2.5mm exp, Whisper +4mm)
• Cushing -133k
• Gasoline -1.971mm (+400k exp)
• Distillates -635k (-1.5mm exp)

After the prior week’s surprisingly large crude build, analysts expected another increase and got one but a very small one at just 415k. Cushing stocks fell for the first time in 4 weeks and products saw notable draws…

Oil posts 6th positive session in 7 on smaller-than-expected inventory build – Oil prices rose on Thursday after the U.S. government reported a much smaller-than-anticipated rise in crude stocks, but gains were capped by worries about the spread of Coronavirus outside China. Data from the U.S. Energy Information Administration (EIA) showed that crude inventories rose only 414,000 barrels last week, compared with expectations of a 2.5 million barrel rise from analysts in a Reuters poll. However, scores of new coronavirus cases and a first death in South Korea fanned fears of global pandemic as research suggested it could be more contagious than previously thought. Brent crude rose 47 cents, or 0.8%, to $59.59 per barrel. The front-month U.S. West Texas Intermediate crude futures contract, which expires Thursday, gained 49 cents, or 0.9%, to settle at $53.78 per barrel. The more-active second-month WTI benchmark was up 95 cents, or 0.7%, at $54.44 a barrel. Immediately after the EIA data, Brent front month, front month WTI and second month WTI touched their highest in February. “The overall (EIA) numbers were kind of bullish… What seems to be pulling us back down a little bit is concerns of coronavirus kicking back in a little bit,” said Phil Flynn, an analyst at Price Futures Group in Chicago. U.S. gasoline stockpiles fell by about 2 million barrels in the week to Feb. 14, while analysts had estimated an increase of 435,000 barrels, according to the EIA data. The data also showed that U.S. East Coast refinery utilization rates fell last week to 59.2%, the lowest since November 2012. However, overall U.S. refinery utilization rates rose 1.4%, primarily as the refiners came out of maintenance. China’s move to cut its benchmark lending rate helped ease some worries about slowing demand in the world’s second-biggest oil consumer and largest crude oil importer. Also supporting oil prices were U.S. sanctions this week on a trading unit of Russian oil giant Rosneft for its ties with Venezuela’s state-run PDVSA and conflict in Libya that has led to a blockade of its ports and oilfields.

Oil slides nearly 1% on renewed fears over toll from coronavirus – Oil prices fell nearly 1% on Friday on renewed concerns about crude demand being pinched by the economic impact of the coronavirus outbreak, while leading producers appeared to be in no rush to curb output.The latest signs of infections outside the Hubei province epicentre in China spurred a selloff across financial markets, as G20 policymakers travelled to Saudi Arabia for talks on the global economy.Brent crude was down 1.4%, at $58.46 a barrel, while U.S. crude dropped 0.9%, at $53.38 a barrel.Both benchmarks were on track for their second consecutive weekly rise, with Brent up 1.8% and U.S. crude rising 2.3%, as fears over the virus’ impact on demand eased earlier in the week and after a smaller-than-expected U.S. crude stock build.”It’s safe to say that uncertainty (surrounding coronavirus) has returned with a vengeance,” said Ole Hansen, head of commodity strategy, Saxo Bank.”We have to acknowledge that we’re dealing with the biggest demand shock since the financial crisis… Until we see China getting back to work, the virus will be the main focus.”In the latest evidence of the economic hit, U.S. business activity in both the manufacturing and services sectors stalled in February.Concerns over the virus have also largely overshadowed risks to supply, including the latest blockade in Libya, said Edward Moya, senior market analyst at OANDA in New York.The United Nations on Friday said ceasefire talks were back on track between forces fighting over Libya’s capital, days after the internationally recognised government pulled out of negotiations.An agreement could end outages of about 1 million barrels per day of Libyan oil and increase pressure on prices.Also on the supply front, Yemen’s Houthis said they had struck facilities of Saudi oil giant Aramco in the Red Sea port of Yanbu.Meanwhile in the United States, the oil rig count, an indicator of future production, rose for a third straight week. Drillers added one oil rig this week, bringing the total count to 679, the highest since the week of Dec. 20, energy services firm Baker Hughes Co said.OANDA’s Moya also pointed to signs the Organization of the Petroleum Exporting Countries (OPEC) was unlikely to add to existing supply curbs.Russian Energy Minister Alexander Novak said on Thursday that producers understood it would no longer make sense to meet before a planned gathering in March.”Concerns the Saudis and Russians are struggling to agree on the appropriate response to the demand destruction the coronavirus has created,” were also weighing on prices, Moya said.

Oil ends lower on reported rift in Saudi-Russian alliance as coronavirus feeds demand anxiety – Oil futures ended with a loss on Friday, pressured by a reported rift in the crude-production alliance between Saudi Arabia and Russia, as concerns about the spread of COVID-19 in China and beyond take a toll on expectations for energy demand. Prices for the U.S. and global crude benchmarks, however, posted weekly gains, partly supported by efforts by China to stimulate the economy, which eased some concerns over the virus outbreak’s impact on the economy. U.S. government data on Wednesday also revealed a smaller-than-expected weekly rise in domestic crude inventories, along with declines in gasoline and distillate stocks. West Texas Intermediate crude for April delivery on the New York Mercantile Exchange fell 50 cents, or 0.9%, to settle at $53.38 a barrel, while April Brent crude BRNJ20, -0.24% lost 81 cents, or 1.4%, to end at $58.50 a barrel on ICE Futures Europe. WTI tallied a 2% weekly rise, based on the front-month contract, while Brent added 2.1% for the week. Saudi Arabia is weighing a break from a production alliance with Russia amid a disagreement between the oil heavyweights over the effect of China’s COVID-19 outbreak on global crude demand, The Wall Street Journal reported Friday. The report said Saudi Arabia, Kuwait and the United Arab Emirates, which make up more than half the production capacity of the Organization of the Petroleum Exporting Countries, were holding talks to discuss a possible joint output cut of up to 300,000 barrels a day. A “300,000-bpd cut would only partially compensate for the lost demand as a result of the coronavirus epidemic,” Marshall Steeves, energy markets analyst at IHS Markit, told MarketWatch. “The extent and duration of lost demand remains to be seen given that the outbreak has yet to peak and it isn’t clear when that might happen.” “Russia has hesitated to agree to this round of cuts as they await signs of where demand is going,” he said. Russia is not part of the Organization of the Petroleum Exporting Countries but has worked with the group since December 2016 in an effort to balance global oil supply and demand. Prince Abdulaziz bin Salman, Saudi Arabia’s energy minister, however, told Reuters that the report that the Saudis are considering a break from the alliance is “nonsense.”

What a breakdown in the Saudi Arabia-Russia oil alliance would mean to the market — Saudi Arabia and Russia have so far failed to reach an agreement to cut oil production even with the COVID-19 epidemic in China expected to significantly hurt energy demand this year, putting the more than three-year-old alliance between the two major oil producers at risk. Saudi Arabia is weighing a break in its alliance with Russia, The Wall Street Journal reported Friday, citing people familiar with the matter. The Saudis are holding talks with Kuwait and the United Arab Emirates this week to discuss a possible joint production cut of as much as 300,000 barrels a day, the report said. “If the alliance were to split, the immediate reaction would be a drop in oil prices, but that could be reversed by a strong OPEC cut,” said James Williams, energy economist at WTRG Economics. “I doubt that OPEC is anywhere near a breakup, but the alliance between OPEC and non-OPEC producers is fragile.” “OPEC for decades wanted to get the Soviet Union and then Russia to become a member,” he explained to MarketWatch. “Since the 80s the Russians avoided it and it took the collapse of oil prices in 2015 and 2016 to bring them to the table. The rising shale production was the prime mover.” The news Friday of a rift in the alliance followed a technical meeting earlier this month between members of the Organization of the Petroleum Exporting Countries and their allies, known collectively as OPEC+. The committee in Vienna recommended that OPEC+ extend current production adjustments to the end of the year. The current agreement calls for OPEC+ cuts of 1.7 million barrels a day, from the October 2018 baseline, through March. “The tussle between OPEC and Russia raises substantial doubt about continuation of production cuts and therefore a return to a heavily oversupplied market,” said Manish Raj, chief financial officer at Velandera Energy. “The market is factoring in the possibility of a total breakdown of the OPEC+ alliance, which can boost supplies by [two to three] million daily barrels in an already oversupplied market.” Reported comments from Saudi Energy Minister Prince Abdulaziz bin Salman on Friday, however, helped to pull oil prices off their lows. “This is absurd and utter nonsense, the energy minister told Reuters on Friday, referring to the media report that the Saudis were considering a break from the OPEC+ alliance with Russia.

Price of crude is at highest level in a month – Data indicating an improved supply picture offered some support this week to crude prices, which remained at their highest level in about a month. Continued concerns about the economic pact of the coronavirus, especially in China — the world’s second-largest economy — were offset by a lower-than-expected build in U.S. crude supplies. West Texas Intermediate on the New York Mercantile Exchange switched over to a new contract month Friday and prices dropped 50 cents to end the week at $53.38 a barrel, up from $52.05 Tuesday — the first trading day after the President’s Day holiday. The posted price also fell 50 cents to $49.75 a barrel. Natural gas prices on the NMEX remained below $2 per Mcf but started the week climbing 14 cents Tuesday to $1.981 per Mcf. Prices were not able to hold that gain, dropping the next three days to close with a 1.5 cent loss at $1.905 per Mcf.

Oman, Bahrain vulnerable to a potential rating downgrade due to the coronavirus: S&P Global Ratings – It’s “fair” to say that countries such as Oman and Bahrain are vulnerable to a potential rating downgrade if the coronavirus outbreak lasts longer than expected, according to the chair of sovereign ratings at a credit rating firm. That’s because the two countries have high fiscal breakeven oil prices, Frank Gill of S&P Global Ratings told CNBC’s “Capital Connection” on Tuesday. Oil prices have been under pressure due to concerns about the economic impact of the coronavirus, with both Brent and U.S. crudes down more than 10% since the beginning of the year. The Organization of the Petroleum Exporting Countries has slashed global oil demand growth forecasts as the coronavirus continues to spread. For China alone, OPEC revised its demand forecast down by 0.2 million barrels a day for the first half of 2020. The first coronavirus infections surfaced in late 2019 in the Chinese city Wuhan, and the disease has since killed more than 2,000 people in China. After the Lunar New Year holiday in late January, many businesses in China extended their closures in a bid to control the virus situation. However, with regard to sovereign rating downgrades in the pipeline due to the coronavirus, Gill pointed to Middle Eastern economies instead of China. If the outbreak continues beyond March, the loss of oil demand could really affect prices, which are a “major budgetary parameter” for Gulf countries, he said, noting that the governments are already spending beyond their means. “If you exclude the investment proceeds from the sovereign wealth funds, every single Gulf economy is running pretty substantial underlying fiscal deficits,” he added. “You have pretty high breakeven oil prices,” he said, singling out Oman and Bahrain. “They do stand out.” According to IMF data released in October 2019, Oman’s fiscal breakeven oil price is projected to be $87.60 a barrel in 2020, while Bahrain’s is expected to be $91.80 a barrel. On Wednesday in Asia, oil prices were slightly higher. Brent crude was trading at $58.12 a barrel, up 0.64%, while U.S. West Texas Intermediate crude traded around $52.46 a barrel, up 0.79%.

Russia Is Defeating The U.S. In The Middle East Oil Game – “Since [U.S. President Donald] Trump outlined the new U.S. foreign policy of not engaging in conflicts abroad unless they were directly aligned with U.S. interests [October 2019], and then effectively withdrawing from Syria and from supporting the Kurds, Russia and China have felt that they can bring forward their plans to bring Iraq within their geopolitical arc of influence,” a senior source who works closely with Iraq’s Oil Ministry told OilPrice.com last week. “They know that provided that they do not impinge on Saudi Arabia and, at a pinch the UAE and Kuwait, or launch attacks against U.S. personnel, then they can basically do whatever they want anywhere else, hence this announcement from Russia last week,” he added. The oil and gas prize for the Russians in Iraq is, of course, huge, but many in the industry do not realise that it is still underestimated. The official figures for oil are that Iraq has around 149 billion barrels of reserves (18 per cent of the Middle East total and 9 per cent of the global total) and is currently the second-largest oil supplier in OPEC, after Saudi Arabia. All of this oil coming at a mean average ‘lifting cost’ per barrel in Iraq of US$2 to US$3 per barrel, according to the IEA, at least as competitive as Saudi Arabia. For gas, the official figures are slightly less impressive, but they are likely even more underestimated than the oil figures, with Iraq having about 135 trillion cubic feet of reserves (the 12th largest in the world), mostly associated at the moment with oil fields in the supergiant fields in the south of the country. However, despite the occasional increase in reserves estimates over the past few years – extremely modest by the standards of its neighbours, incidentally – much of Iraq still remains unexplored or under-explored compared with other major oil-producing countries. According to the International Energy Agency (IEA), and derived from the landmark United States Geological Survey (USGS) 2000 assessment and subsequent updates, the level of ultimately recoverable resources at that time was around 232 billion barrels of crude and natural gas liquids. Even this, though, might prove on the low side, added the IEA, as a detailed study by Petrolog around that time reached a similar figure but did not include the parts of northern Iraq in the KRG area or examination of the geological anomalies prevalent in the central and western regions of the country. Even using the much more conservative USGS number, Iraq had just a decade ago only produced around 15 per cent of its ultimately recoverable resources, compared with 23 per cent for the Middle East as a whole at that time. At that point, of the 530 potential hydrocarbon-bearing geological prospects identified by – only – geophysical means in Iraq only 113 had been drilled, with oil being found in 73 of them, a success rate of 65 per cent. Although more of these geophysically-identified sites have now been drilled many more new ones have arisen due to identification by more sophisticated analysis of seismic and historical data.

Yemen’s Houthis Shoot Down Saudi Jet With Advanced Surface-To-Air Missile – The Saudi News Agency quoted the Arab Coalition spokesperson Turki Al-Malki as saying on Saturday that one of their Tornado fighter jets was shot down over northern Yemen on Friday night.“At 23:45 P.M. on Friday, February 14, 2020, a Tornado fighter plane of the Royal Saudi Air Force crashed while on a mission of close air support to units of the National Army,” Malki said.Houthi forces announced on Friday evening that their air defense troops shot down the fighter jet over the Al-Jawf Governorate after it carried out airstrikes on several sites in northern Yemen.“The air defenses shot down the coalition war plane with an advanced surface-to-air missile supported by modern technology. The sky of Yemen is not for a walk and the enemy must count a thousand time for that,” the Ansarallah-affiliated Yemeni Army (Houthi) spokesperson, Brigadier General Yahya Sare’a, said on Friday evening.The Royal Saudi Air Force Tornado aircraft “crashed” in northern al-Jawf province during an operation to support Yemeni government forces, the coalition said in a statement carried by the official Saudi Press Agency on Saturday.…Separately on Saturday, Al Masirah TV quoted Houthi health officials as saying that at least 30 civilians were killed in coalition air raids in the same region that the plane had gone down. The death toll could not be independently verified. pic.twitter.com/qazcPB0ser – Yuri Lyamin (@imp_navigator) February 15, 2020The Houthis released video of the jet’s downing; it appears to show a sophisticated weapon deployed.

US-backed Saudi bombing kills at least 32 civilians in Yemen -Saudi airstrikes killed at least 32 civilians while wounding another dozen on Saturday, United Nations officials reported. This latest atrocity in the long list of war crimes by the US-backed Saudi-led forces in Yemen’s five-year-old war followed a rare shootdown of a Saudi Tornado jet aircraft Friday as it was carrying out combat operations over Yemen’s disputed northern province of Al-Jawf. The strike was described by Yemenis as a “revenge” attack for the downing of the plane. Those targeted included children who had gathered around the wreckage of the aircraft as well as families in nearby homes. Medical teams reported difficulty in reaching the wounded as Saudi jets continued to circle the area, threatening a “double tap” strike against first responders. Many of the wounded were in critical condition, and the death toll is expected to rise. The strike came amid a resurgence of fighting following a brief lull that was accompanied by an agreement on a prisoner swap between the Saudi-led forces and the Houthi rebels, who control Yemen’s most populous region in the country’s north, including the capital of Sanaa. Describing the latest bombing as “shocking,” Lise Grande, the United Nations’ humanitarian coordinator for Yemen, stated: “So many people are being killed in Yemen; it’s a tragedy, and it’s unjustifiable. Under international humanitarian law, parties which resort to force are obligated to protect civilians. Five years into this conflict, and belligerents are still failing to uphold this responsibility.” While the bombing is no doubt a vicious crime against humanity, it is, after five years of such crimes, hardly a shock. Since the war began in March 2015, when the Saudi monarchy intervened in an attempt to reimpose the unelected puppet government of President Abd Rabbuh Mansur Hadi, an estimated 100,000 Yemenis have lost their lives and hundreds of thousands more have been wounded. Saudi bombings, including against homes, hospitals, schools, buses and weddings, are blamed for 67 percent of Yemen’s civilian casualties. The Saudi monarchy and its de facto head Crown Prince Mohammed bin Salman have enjoyed complete impunity in carrying out the slaughter of the Yemeni people thanks to the unstinting support from Washington, initiated under the Democratic administration of Barack Obama and continued under the Republican Donald Trump. While the United Nations Security Council – where Washington wields a veto – has imposed sanctions against the Houthi rebels, it has approved not a single resolution condemning the wholesale killings carried out by Riyadh.

UN Condemns ‘Shocking’ and ‘Terrible’ US-Backed Saudi Coalition Bombing That Killed 31 Yemeni Civilians – The United Nations and humanitarian aid groups condemned the U.S.-backed Saudi-led coalition for carrying out airstrikes Saturday that killed 31 civilians and wounded dozens more, including women and children, in Yemen’s Al-Jawf province. “We share our deep condolences with the families of those killed and we pray for the speedy recovery of everyone who has been injured in these terrible strikes,” Lise Grande, U.N. humanitarian coordinator for Yemen, said in a statement. “So many people are being killed in Yemen – it’s a tragedy and it’s unjustified. Under international humanitarian law parties which resort to force are obligated to protect civilians.” “Five years into this conflict and belligerents are still failing to uphold this responsibility,” added Grande. “It’s shocking.” Xavier Joubert, director of aid group Save the Children Yemen, demanded an investigation into the airstrikes and said nations providing the weaponry for such attacks must share the blame. The United States is the largest supplier of weapons to the Saudi regime, whose years-long assault on Yemen has helped create the world’s worst humanitarian crisis. “The war shows no signs of slowing down. Yemen is a hellish place for children,” said Joubert. “The reports of today indicate that once more explosive weapons make no distinction between fighters and civilians. This latest attack must be urgently and independently investigated, and perpetrators held to account.” “We call on all parties to the conflict to adhere to international laws and standards, and to protect children on the ground,” Joubert continued. “Those who continue to sell arms to the warring parties must realize that by supplying weapons for this war, they contribute to making atrocities like today’s all too common.”

“They Have Not Relented”: U.S. Maintains Support for Yemen War as Saudi Airstrike Kills 31 Civilians Democracy Now – In Yemen, 31 people were killed in U.S.-backed Saudi airstrikes over the weekend, including women and children. The strikes in the northern al-Jawf province came just hours after the Houthis said they had shot down a Saudi fighter jet in the same area. The United Nations called the drone strike “shocking.” The deadly strike follows a recent uptick in violence in northern Yemen and comes as the war there hits a five-year mark. More than 100,000 have died, and far more have been displaced, since the conflict began in 2015. On Sunday, the United Nations said the Houthis and U.S.-backed Saudi and United Arab Emirates coalition had agreed to a major prisoner swap, the first of its kind in the long-running war. We speak with Shireen Al-Adeimi, a Yemeni scholar, activist, and an assistant professor at Michigan State University.

Saudi jet ‘downing’ in Yemen stirs alarm over Houthi weaponry (AFP) – Claims that Yemeni rebels shot down a Saudi warplane have spotlighted the increasingly potent Huthi arsenal — cause for alarm in Riyadh as fighting escalates amid faltering efforts to end the five-year conflict. The Iran-backed Huthi rebels said they downed the Tornado aircraft on Friday over the volatile northern province of Al-Jawf, in a setback for the Riyadh-led military coalition that has always enjoyed air supremacy in the war. The fate of the two Saudi crewmen who ejected from the plane remains unknown. The rebels, once dismissed as a ragtag militia, said they hit the jet with an “advanced surface-to-air missile”, a claim that followed recent UN reports that the Houthis had received weapons bearing signs of Iranian origin. Tehran has long denied arming the rebels. Following the crash, a Huthi spokesman said Yemeni airspace was off-limits and not a “picnic” spot for its enemies. “This is definitely a cause for alarm for the coalition,” Becca Wasser, a policy analyst at the US-based RAND Corporation, told AFP. “They need to plan as though this is the new normal and that the Huthis have the capability to shoot down more aircraft, which is going to affect their operations and how they plan their air missions.” The coalition did not respond to AFP’s request for comment. Saudi Arabia has long asserted dominance over Yemeni air space. The kingdom has faced repeated international criticism for its aerial bombing raids in Yemen that have often resulted in civilian deaths. But the rebels are countering the threat by bolstering their air defence capabilities, notably with what they call self-made surface-to-air missiles. “While the Huthis claim a self-produced missile shot down the Saudi Tornado, it remains to be seen whether that is truly the case as this has been an area where they have received Iranian assistance,” said Wasser.

Houthi Missiles Target Aramco Facility Just After Pompeo Arrives In Saudi Arabia – Saudi Arabia’s air defense Patriot missile systems were active at the coastal city of Yanbu in the early Friday morning hours after ballistic missiles were inbound, believed launched by Shia Houthi rebels out of Yemen. Crucially, the Red Sea city of Yanbu is site of a large state-owned Saudi Aramco oil refinery, the likely intended target given the prior Sept.14 large scale attack on Aramco facilities which was also claimed by the Houthis. Yanbu is nearly 600 miles from Yemen, meaning sophisticated missile systems were used – likely the Burkan 2 – which in the past Washington has accused Iran of supplying. Spokesman for the Saudi-led coalition, Col. Turki Al-Maliki, was cited in the Saudi Press Agency as saying the launch originated in Yemen’s capital of Sanaa, but that Patriot anti-air missiles intercepted the rockets.

Trump & Erdogan Discuss Ending Unacceptable Syrian Offensive To Take Back Idlib — On Saturday President Trump held a much anticipated and crucial phone call with his Turkish counterpart Tayyip Erdogan at a moment tensions are soaring over Idlib, and after a week of direct confrontations between the Syrian and Turkish armies left scores dead and wounded on either side. Turkey’s foreign minister said the two leaders discussed the unfolding crises in Syria and Libya – both places where Turkey is controversially intervening militarily – as well as the White House’s peace plan for the Israel-Palestine conflict, which Erdogan in no uncertain terms has rejected. And though few details were given, the two reportedly agreed for the resumption of US-Turkey trade talks. As expected the two condemned the Syrian Army advance into Idlib, calling the military offensive with Russian support “unacceptable”. This after last week the US dispatched special envoy for the region James Jeffrey to Ankara, where the diplomat verbalized full support to “our NATO ally Turkey”.”Stressing that the regime’s most recent attacks are unacceptable, the president and Trump exchanged views on ways to end the crisis in Idlib without further delay,” the Turkish presidency said in a statement.Turkey is worried about record-number refugee displacement as hundreds of thousands are reportedly now fleeing to the border, while Damascus and Moscow have charged Turkey with protection terrorists operating in Idlib. They expressed their desire for an immediate halt to the fighting. On the issue of Trump’s ‘Deal of the Century,’ Erdogan reiterated during a separate remarks to reporters on Saturday:“I would like to state once again that this so-called peace plan is nothing but a dream that threatens the regional peace and tranquility,” Erdogan told reporters upon his re