Written by rjs, MarketWatch 666
Here are some more selected news articles about the oil and gas industry from the week ended 23 May 2020. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening.
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US Headed For Another ‘Tanker War’ With Iran – This Time Off Venezuela’s Coast -Iranian state TV has announced at least five least five Iranian-flagged tankers are transporting fuel to Venezuela through the Atlantic Ocean and plan to break the American blockade on the Latin American country.Iran has warned that any US attempt at intercepting its fuel tankers “would have serious repercussions for the Trump administration ahead of the November elections.” State-funded PressTV underscores that “Iran is shipping tons of gasoline to Venezuela in defiance of US sanctions on both countries in a symbolic move guaranteed by Tehran’s missile prowess.”Both countries have been targeted under US sanctions and various levels of covert military action of late. President Trump has taken a personal interest in renewed pressure on Maduro, within the past months reportedly pushing his generals to go forward with a ‘naval blockade’ of the socialist nation. State media has further emphasized that the Iranian fuel tankers will not attempt to conceal their presence or mission: “Iran has intentionally hoisted its own flag over the huge tankers which are navigating through the Atlantic before the eyes of the US Navy,” according to the report.Reuters has also reported that US defense officials are planning a potential response:The United States has a “high degree of certainty” that Venezuelan President Nicolas Maduro’s government is paying Iran tons of gold for the fuel, the official said, speaking on condition of anonymity.“It is not only unwelcome by the United States but it’s unwelcome by the region, and we’re looking at measures that can be taken,” the official said.
Coronavirus widens climate rift between European and U.S. oil majors – (Reuters) – Europe’s top oil and gas companies have diverted a larger share of their cash to green energy projects since the coronavirus outbreak in a bet the global health crisis will leave a long-term dent in fossil fuel demand, according to a Reuters review of company statements and interviews with executives. The plans of companies like BP, Royal Dutch Shell and Total are in step with the European Union’s efforts to transition to a lower-carbon economy and away from a century-old reliance on oil, and reflect the region’s widening rift with the United States where both the government and the top drillers are largely staying committed to oil and gas. “We are all living differently and there is a real possibility that some of this will stick,” BP Chief Executive Bernard Looney told Reuters in a recent interview, citing big declines in air and road travel, and a boost in telecommuting. Global oil majors have all cut capital spending sharply as worldwide stay-at-home orders triggered by the coronavirus outbreak slammed fuel demand and sent oil prices to record lows. But Europe’s top five producers – BP, Shell, Total, Eni, and Equinor – are all focusing their investment cuts mainly on oil and gas activities, and giving their renewables and low carbon businesses a relative boost, according to Reuters calculations. Company executives and investors say they expect fossil fuel demand to peak earlier than previously thought. At the same time, the EU is expected to focus economic stimulus on green energy infrastructure in the wake of the crisis to further align it with the ambitions of the Paris agreement to fight climate change, making investments in the sector more attractive. European Commission President Ursula von der Leyen recently pledged to make climate policies the bloc’s “motor for the recovery.” BP aims to keep its previously planned $500 million in spending on low-carbon initiatives this year intact, despite a company-wide spending cut of 20% in the wake of the coronavirus, its incoming Chief Financial Officer Murray Auchincloss said in an analyst call on April 28. Shell CEO Ben van Beurden, meanwhile, told reporters in an April 30 conference call he also wants to “spare” the company’s New Energy division, which is focused on renewables and low-carbon technologies, from the worst of its budget cuts.
European wholesale gas prices fall to fresh record lows –European gas markets have fallen to fresh record lows as the impact of the coronavirus pandemic continues to erode the demand for fossil fuels. In the UK, the wholesale market price for gas delivered next month fell to 9.25 pence per therm, its lowest in 21 years, raising hopes that winter heating bills may be lower this year. Gas markets in Asia, Europe and the US have all slumped after being left awash with a glut of gas owing to the collapse in demand. In the Netherlands, considered the most important gas market in mainland Europe, prices fell to €3.93 (£3.52) per megawatt-hour on Thursday, less than a third of the price this time last year. The market price for gas was in decline before the Covid-19 pandemic, which could cut demand for gas by 5% this year, according to forecasts from the International Energy Agency. Gas market prices have continued to slide despite cancelled gas exports from the US where shale projects are beginning to shut down, according to analysts at the petrochemical market information provider ICIS. In March, the US loaded 72 cargoes of gas for export on giant liquified natural gas (LNG) tankers, and loaded another 61 in April. From July it will hold back between 30 and 40 cargoes, which could mean cutting around 2.6m tonnes of LNG from the global market, the equivalent of about 8% of the world’s monthly gas supply. Ed Cox, head of LNG at ICIS, said the collapse of European prices showed that the US decision to cut gas exports was “not sufficient to balance the market”, adding that “more supply needs to be taken offline”. Europe’s gas storage facilities, which steadily fill up over the summer in preparation for the winter months, are already more than half full after record storage injections through April to take advance of the cheap gas. Energy suppliers may be able to pass on the record low prices to their customers this winter. But some firms are likely to face severe financial pressure owing to unpaid customer bills, which may limit their ability to pass on savings.
GLOBAL LNG-European price slump drags down Asian LNG – (Reuters) – Asian spot prices for liquefied natural gas (LNG) were dragged down this week by a sharp drop in European gas prices and global oversupply. The average LNG price for July delivery into northeast Asia LNG-AS was estimated at between $1.85 and $2.00 per million British thermal units (mmBtu) on Friday, compared to the $2.40 per mmBtu assessment of June delivery last week. “European gas prices are taking LNG prices lower across the globe,” an LNG trader said. The front-month price on the Dutch market dropped by almost 30% in the past week, trading close to $1.00 per mmBtu on Friday. The day-ahead dropped below $1.00 per mmBtu. “It’s a rolling oversupply that is getting worse and worse,” a gas trader in Europe said. The low prices globally have forced buyers of U.S. LNG to cancel up to 45 cargoes for July loading as delivery became unprofitable, after at least 20 June cargoes were cancelled last month. However, demand from some Asian buyers is recovering. Buyers in China are taking advantage of low prices and are looking for cargoes for delivery from July onwards. PetroChina likely bought a cargo from Russia’s Novatek that operates the Yamal LNG plant at $2.50 per mmBtu for the second half of July delivery. It also bought a cargo from BP at $1.85 per mmBtu for mid-July delivery at S&P Global Platts’ Market on Close window on Friday. Seven U.S. cargoes are expected to be delivered to China in May, the highest number of cargoes for this route since January 2018.
Negative pricing seen spreading from oil to gas as European demand slumps (Reuters) – A month after U.S. crude oil prices collapsed into negative territory, European gas markets are facing the prospect of also slipping into the red after a slump in demand and surging inventories pushed prices into low single digits. Dutch and British gas prices have plunged due to weak demand amid coronavirus lockdowns and strong renewables output, compounding an already oversupplied market with little available storage space left. In the European benchmark gas market, the Dutch TTF hub, the day-ahead price was down 20% at 2.50 euros per megawatt hour, equivalent to less than $1 per million British thermal units (mmBtu). Prompt UK prices were up to 30% lower. Some traders are expecting European gas contracts for near-term delivery to go to zero or even turn negative – which could force sellers to give gas away – following a similar move in the West Texas Intermediate (WTI) oil price last month. “If supply remains this strong until storage is full, we can possibly see negative prices at some point, as there is no sign of relief from the demand side,” a European gas trader said. “If it will happen today or next week, it’s hard to say. This weekend we have very low demand and strong supply, so weekend prices might go close to negative,” the trader added. Unlike U.S. crude, UK gas prices have traded negative before, falling below zero in 2006 after the Langeled pipeline from Norway started pumping gas to Britain for the first time. Then, also, storage sites were nearly full. The risk of turning negative is higher for British prompt prices, analysts and traders said, as its only long-term storage site, Rough, closed in 2017. Production cuts or a major outage, combined with significant demand rises, are needed to offset oversupply. “The (UK market) simply doesn’t have as many levers left to pull as continental hubs such as the Dutch,”. “Prices may need to fall to a level that would shut in UK production or lower Norwegian flows even further.”
NWE gas storage sites could be ‘almost’ full by end-August: Platts Analytics | S&P Global Platts – Continental Northwest European gas storage sites could be almost entirely full by the end of August and injections will have to fall “dramatically” later this summer to avoid sites hitting capacity and prices collapsing even further, according to S&P Global Platts Analytics. Storage sites across Europe are filling fast given record low spot prices and the market being in a steep contango, making storage plays particularly economic at present. Speaking on a webinar Wednesday, Platts Analytics senior gas analyst Gilles Heyberger said the continental Northwest European storage surplus is expected to expand to above 6 Bcm based on recent supply and demand, before falling at the start of the third quarter. “Injections need to drop dramatically to achieve this,” Heyberger said. “This injection pattern leads to storages being almost entirely full by the end of August, with very limited injections in September and slight withdrawals in October,” he said. Heyberger said, however, that there was downside risk to this view. “A slightly looser balance would require injections that cannot be accommodated,” he said, adding that as remaining storage space dwindled there would be an increase in prompt price volatility. According to data from Gas Infrastructure Europe, gas storage sites have been filling quickly in April and May across all of Europe, with German stocks already 81.4% full as of May 19. Germany already has a total of 184.7 TWh (17.5 Bcm) stored just one and a half months into the six-month injection season. The strong injections come on the back of a significant storage overhang at the end of another mild winter following a strong storage build at the end of 2019 due to fears — ultimately unfounded — that Russian deliveries via Ukraine could have been disrupted at the start of 2020. The storage situation is similar in other countries, with Austrian storage already 81.7% full and Spain 75% full, according to GIE. Based on average injection rates over the past five Gas Years, storage sites could be full by mid-August. Germany and Austria could see their storage sites fill to capacity first if injection rates match the average from the past five years, with some industry observers expecting them to be full as early as July. They would likely be followed by the Netherlands, France, Hungary and the Czech Republic in late August.
Coast Guard completes work to stem oil spill from British WW2 wreck – The Icelandic Coast Guard has completed work to stem an oil spill from El Grillo, a British tanker wrecked in Seyðisfjörður by German aircraft during World War Two.As reported, the Icelandic government recently granted the coast guard 38 million ISK to stem the oil spill that has been harming local bird life. The project was an urgent priority as the volume of oil leaking from the ship was expected to increase when waters warm in summer.Seven divers travelled to Seyðisfjörður from Reykjavik last week and started setting up the equipment required to fill the ship’s corroded hull with concrete. Work ended on May 15th, but extensive checks will be carried out to ensure the oil spill has been successfully stemmed. The coast guard shared a video of the barge used in the operation: There have been several efforts to contain the oil leak in the past, but they have had limited success. In 1952 and 2001 engineers attempted to pump oil out of the tanker, but 10-15 tonnes of oil were left behind. It is hoped that the new technique of filling the tanker with concrete will be more effective.
Ukraine’s Odessa gets first WTI oil cargo from U.S. – sources –(Reuters) – Ukraine’s Black Sea port of Odessa is set to receive on Wednesday its first ever West Texas Intermediate (WTI) oil cargo from the United States, according to industry sources and shipping data, just a month after the front-month futures for the blend turned negative. U.S. West Texas Intermediate (WTI) May crude futures sank to minus $38 per barrel on April 20, just days before their expiration, in a quirky trading pattern never seen before, amid overproduction and lack of storage capacity inflicted by the coronavirus-battling restrictions. On Wednesday, the front-month WTI futures were trading at above $32 a barrel. Industry sources said that the UMLMA tanker has shipped in BP’s 80,000-tonnes cargo for further delivery to the Kremenchug refinery of Ukrtatnafta. The value has not been disclosed. Kiev has moved to diversify its energy supplies from its ex-Soviet master, Russia, following Moscow’s annexation of the Crimean peninsula in 2014 and subsequent flair-up of pro-Russian insurgency in eastern Ukraine.
Could This Become The World’s Newest Oil Exporter? -For many years it seemed that Liberia has missed out on the West African oil bonanza – whilst Nigeria has already established itself as the leading oil producer in the Gulf of Guinea and Ghana was about to celebrate the discovery of Jubilee, Liberia was still bleeding from a 14-year civil war. Having allocated substantial parts of its offshore areas to leading majors in the 1st and 2nd licensing rounds, it took several years to iron out all the technicalities of Liberia’s exploration and production terms, a period which was dampened by rather pessimistic exploratory drilling results. There is a strange irony in that following more than a decade of leisurely political decision-making Liberia is to push forward with its offshore licensing round with the COVID-19 pandemic raging on and oil prices being at multi-year lows but that is exactly what is going on.The Liberia Petroleum Regulatory Authority (LPRA) launched the Harper Basin licensing round on April 10, opening the bidding procedure for nine blocks in the country’s western offshore zone. Despite not being able to conduct the usual upstream roadshow, compelled to launch the licensing round online, LPRA did not delay the licensing round altogether and has instead set February 28, 2021 as the bidding deadline (originally October 2020 was assumed to be the cutoff date). Liberia is more confident that it can attract foreign investment – the government has amended the Petroleum Law and can now offer bigger and newly delineated offshore blocks. But first it might need to convince investors that the oil is genuinely there.
Massive die-off of fish on Nigerian coastline linked to Toxic Discharge – An immense blanket of dead fish stretching across three states has sparked anger and frustration among communities along the Atlantic Ocean coastline in Nigeria. The area is known for oil spills that have polluted the waters and left fish and other wildlife inedible.The massive die-off was first reported in February when community people from Ogbulagha Kingdom of Delta State raised an alarm on the schools of dead fish floating and littering their shores. The silvery fish graveyard stretched from Delta State through Bayelsa State to Rivers State.In response, officials of the National Oil Spill Detection and Response Agency (NOSDRA) took samples of the fish, sediment and water for analysis. Idris Musa, head of NOSDRA, declared the die-off had nothing to do with the continual oil leakages from offshore platforms as claimed over the years by Amnesty International, the UN Environmental Programme (UNEP), and dozens of environmental organizations including those in Nigeria itself.Musa admitted that the values of cadmium and iron were higher than the regulatory limit, according to a post that appeared on the NOSDRA website.But environmentalists including Ako Amadi and Nnimmo Bassey of the Health of the Mother Earth Foundation (HOMEF), failed to find satisfaction in the NOSDRA report, finding it too superficial to be taken seriously.They accused NOSDRA of playing down and even questioning the fact of the massive fish kill that was evident in many locations.”The Ministry of Environment and relevant agencies have a duty to tell Nigerians what killed the fish so that we know how to respond to this and future incidents,” said activist Nnimmo Bassey. “We are not satisfied with NOSDRA’s report as this does not bring a closure to the saga. Explaining why we experienced a massive death of fish on our coastlines is not beyond our scientists within and outside government.” The matter is also being pursued by lawyers under the aegis of the Association of Environmental Lawyers of Nigeria (AELN) who urged the Federal Government to take urgent steps to check the increased toxicity of the nation’s territorial waters.
Oil tanker off Taranaki poses spill risk that could cost taxpayers – Taxpayers could end up liable if a ship anchored off Taranaki spills any of its 40,000 barrels worth of crude oil. It has been ordered to remain about 50km off the Taranaki coast over winter against the wishes of the owners. Norwegian-listed company BW Offshore argued sitting tight posed a safety risk. The vessel was contracted to Tamarind Taranaki – a subsidiary of Singapore-based Tamarind Resources – which went belly up after an unsuccessful drilling campaign at the Tui oil field late last year The company owes creditors more than $300 million, including about $100 million owed to the government for its share of decommissioning costs at Tui. BW Offshore wanted to detach the Umuroa from the oil field in accordance with a 2017 Environmental Protection Authority decision, but the EPA lodged an urgent appeal this year, citing Tamarind Taranaki’s liquidation as a change in circumstance. In a decision released last month, the High Court ordered the Umuroa to stay in place until it could be safely removed. BW Offshore chief financial officer Staale Andreassen said the company’s position had not changed. “It’s a more and more ageing unit and we believe the safest of all options would be to disconnect as we planned to do and remove the vessel from the field,” Andreassen said. “So although we don’t feel there is any immediate danger, we believe that’s the safest option.”
PCG probes oil spill at CDO port – The Philippine Coast Guard in Northern Mindanao (PCG-NM) on Friday began investigating the oil spill that occurred on the seaport of Barangay Macabalan, this city. The oil spill was first reported to authorities by crews of the ships docked at the Macabalan port Thursday morning, said Ensign Jerich Ybañez, PCG-NM spokesperson. “As soon as we got the information, we then referred it to our MEPU (Marine Environmental Protection Unit) which responded right away,” Ybañez said. He said the MEPU contained the spill by retrieving the oil through absorbent pads and cordoning the area with “spill boom,” a floating barrier used to contain an oil spill. As of Friday, the oil spill has already been contained as the PCG is now determining who was responsible for dumping the substance into the sea, he said. “We have collected samples from the oil spill. As of the moment, we have yet to pinpoint (the culprit) but we are conducting an investigation,” Ybañez said. He said they are now tracing the source of the spill through the samples they have gathered from the sea and from the shipping lines docked at the port. Since Thursday, the PCG-NM has collected about 210 liters of concentrated and diluted oil from the spill, he said. At the Macabalan port where a team from the PCG-NM was conducting the clean-up, ships coming mostly from Vietnam can be seen unloading tons of imported rice onto waiting cargo trucks. “There is a ‘footprint’ and we are going to take the ‘footprint’ of what we have collected. From there, we will know where the oil came from,” he said, adding that once they have traced the oil spill to a particular ship, they will then prepare a complaint with the imposition of sanctions and penalties to follow. Commander Jonie Belarmino, head of the PCG’s MEPU in Northern Mindanao, said the oil spill could have an adverse effect on the marine life such as fish, corals, and mangroves if it was not contained. He also said that the spill has reached a stretch one nautical mile or 1.852 kilometers when it was first reported. “There was a possibility that it could escalate. So far, we have contained it through the use of the spill boom to prevent it from further spreading,” he said.
Pandemic Leaves Huge Hole in Global Oil Demand— A fifth of global demand for oil will disappear this quarter. All three of the major forecasting agencies now agree that the world faces its biggest-ever slump in oil consumption, after governments imposed movement restrictions on billions of people to combat the coronavirus. The scale of the demand hit means that despite producers implementing unprecedented output cuts, stockpiles will soar this year. The International Energy Agency, the Organization of Petroleum Exporting Countries and the U.S. Energy Information Administration have all updated their oil market forecasts in the past week and they have come into much closer alignment in their views of the depth of demand destruction. The pessimistic stance adopted last month by the International Energy Agency has now become the consensus view – the world will use about 1.7 billion barrels less oil this quarter than it did during the same period last year. In reports published mid-April, the EIA and OPEC both saw demand falling by about 12 million barrels a day in the second quarter, compared with the same period last year. The IEA alone forecast a drop in excess of 20 million barrels a day. It has since become a little more optimistic, as lock-downs are eased and businesses gradually begin to reopen. But the other two forecasters have moved sharply in the opposite direction, seeing much more demand destruction than they did a month ago and catching up with the IEA’s more pessimistic view on oil consumption. All three still see the situation improving dramatically in the second half of the year. Although demand is expected to remain below year-earlier levels throughout 2020, the size of the drop is seen to shrink significantly. The IEA and the EIA see it around 5 million barrels a day below last year’s levels in the third quarter, while OPEC is less optimistic, with its forecast still showing a year-on-year loss of more than 8 million barrels a day. The situation is seen improving further in the final three months of the year, with estimates of the demand loss ranging from 2.26 million barrels a day from the EIA to 4.5 million from OPEC. But, as the IEA warns, the biggest uncertainty is “whether governments can ease the lock-down measures without sparking a resurgence of Covid-19 outbreaks.” At present, the forecasts assume that they can. If that assumption proves incorrect, then we could be in for another slump in demand as widespread lock-downs return. Even as the EIA and OPEC have become more pessimistic about the size of the second-quarter demand destruction, the overall mood surrounding the oil market has become more optimistic. In part that’s the result of the first signs that the worst of the demand destruction may have passed, but it also reflects optimism about the impact of output cuts that are a necessary part of balancing the market. The IEA points to “massive cuts” in production from countries outside the OPEC+ agreement, which itself saw 20 countries agree to cut output by an unprecedented 9.7 million barrels a day in May and June from baselines that were mostly set at October 2018 levels. If the OPEC+ countries comply fully with their agreed cuts – which would be a first – the agency sees global oil production in May some 12 million barrels a day below the April level. A further cut of 1.2 million barrels a day by Saudi Arabia, Kuwait and the United Arab Emirates has been pledged for June.
Goldman Sachs: Oil Market Headed For Deficit In June – Improving global oil demand and faster-than-expected production curtailments from outside the OPEC+ pact are set to push the oil market into deficit next month, according to Goldman Sachs.Yet, there is little room for an oil price rally in the near term because of the still sizeable oversupply of crude oil and refined products, Goldman Sachs said in a note, carried by Reuters. On the other hand, demand is improving from April lows and is limiting the downside for oil prices, the investment bank said. “We believe that the next stage of the oil market rebalancing will be one of range-bound spot prices with the most notable shifts being a decline in implied volatility as well as a continued flattening of the forward curve without long-dated prices rising yet,” Goldman Sachs said in its note.The Wall Street bank kept its forecasts for oil prices for the summer, with Brent Crude seen at $30 a barrel, and WTI Crude at $28 per barrel, due to the still uncertain pace of global demand recovery.Early on Thursday, Brent Crude was up 2.8 percent at $30.01 and WTI Crude was trading up 3.04 percent at $26.08, after the EIA reported on Wednesday a surprise crude oil inventory decline of 700,000 barrels for the week to May 8. In gasoline, the EIA reported an inventory draw of 3.5 million barrels, after a draw of 3.2 million for the previous week, which fueled hopes for demand recovery. Gasoline production last week averaged 7.5 million bpd, versus 6.7 million bpd a week earlier. “US crude oil inventories declined by a modest 745Mbbls over the week, while stocks at
A Huge Fleet Of 117 Tankers Is Bringing Super Cheap Crude To China –While the rest of the world is tentatively coming out of lockdowns, China is taking advantage of the cheapest crude oil in years to stock up as demand is starting to return in the world’s largest oil importer, Bloomberg reported on Friday, citing tanker-tracking data it has compiled. At present, a total of 117 very large crude carriers (VLCCs) – each capable of shipping 2 million barrels of oil – are traveling to China for unloading at its ports between the middle of May and the middle of August. If those supertankers transport standard-size crude oil cargoes, it could mean that China expects at least 230 million barrels of oil over the next three months, according to Bloomberg. The fleet en route to China could be the largest number of supertankers traveling to the world’s top oil importer at one time, ever, Bloomberg News’ Firat Kayakiran says. Many of the crude oil cargoes are likely to have been bought in April, when prices were lower than the current price and when WTI Crude futures even dipped into negative territory for a day.Last month, emerging from the coronavirus lockdown, China’s oil refiners were already buying ultra-cheap spot cargoes from Alaska, Canada, and Brazil, taking advantage of the deep discounts at which many crude grades were being offered to China with non-existent demand elsewhere.China was also estimated to have doubled the fill rate at its strategic and commercial inventories in Q1 2020, taking advantage of the low oil prices and somewhat supporting the oil market amid crashing demand by diverting more imports to storage, rather than outright slashing crude imports.China’s crude oil imports jumped in April to about 9.84 million bpd as demand for fuels began to rebound and local refiners started to ramp up crude processing, according to Chinese customs data cited by Reuters.
China’s Splurge on Dirt-Cheap Crude Revealed in Tanker Movements — Chinese oil traders know bargain crude prices when they see them. That, at least, is one conclusion from the movements of the world’s supertankers. There are 117 of the industry’s largest crude carriers en route to ports in the Asian country, where there have been increasing signs of a pickup in oil demand following the outbreak of coronavirus. That’s the biggest number of the vessels since at least the start of 2017, and quite possibly ever. Assuming they have standard-sized cargoes on board, the ships are likely delivering at least 230 million barrels of cargo. The surge in flows is just another piece of evidence underpinning the idea that the country’s oil consumption is recovering at a time when many other nations are still struggling to ease lockdown measures as they combat Covid-19. China’s apparent oil demand surged by roughly 11% from March into April, and the nation’s independent refineries are processing at a record rates. “Chinese purchases are done on geopolitical grounds and pricing ground,” said Peter Sand, the chief analyst at shipping trade group BIMCO. “The stars aligned for perfectly in 2nd half of April.” Many of the shipments, due to arrive between now and mid-August, are likely to have been purchased last month, when oil prices briefly plunged toward zero because of a huge global overproduction of crude. U.S. barrels traded at negative prices last month amid concern about a lack of space to store supplies while, across the world, physical grades also became steeply discounted. China’s apparent oil demand rose to 11.81 million barrels a day in April, up from 10.63 million in March, according to data compiled by Bloomberg. That means the vessels en route will deliver almost 20 days of supply.
Glut of Oil on Tankers Shows Signs of Shrinking— One of the oil market’s most obvious signs of oversupply — millions of barrels being stored on tankers all over the world — is showing very tentative signs of shrinking. On Thursday, North Sea oil traders offered almost 8 million barrels of crude for sale on a pricing window organized by S&P Global Platts. Some of the 13 cargoes being sold were previously being stored at sea. The offers — most didn’t end in deals — were the first of their kind since a global surplus began overflowing onto tankers early last month. The offers provide an insight into how physical crude traders view the all-important North Sea oil market, where prices serve as benchmark for millions of barrels all over the world. The amount stored on ships globally is tentatively showing signs of falling too. It stood at 155 million barrels on Thursday, down from 176 million barrels last week, according to Vortexa Ltd., a tanker analytics firm. Though volumes have fallen, the amount floating is still more than double what it was two months ago. “Crude in floating storage is likely to fall first and fastest upon any demand strength, as it’s typically the most expensive form of storage available,” said Jay Maroo, a senior analyst at Vortexa. It’s too soon to say if the shrinking floating hoard will mark the start of a trend, or whether it’s just the ebb and flow of trading. Most estimates indicate that oil production continues to exceed demand by millions of barrels a day, implying there’s an excess that still needs to be stored. Nevertheless, the drop in stockpiles at sea mirrors a sharp reduction in the financial rewards that the oil market offers those who’re storing. A so-called supercontango, where more-immediate prices are deeply discounted relative to later months, has fallen sharply in recent weeks. At one stage, the gap between first-month Brent crude and supplies six months later stood at $14 a barrel. That equated to $28 million for a standard supertanker cargo. Now the gap is just $3.43 and wouldn’t cover the cost of hiring the ship. The precise picture on floating storage — and which trades are being unwound — is also a mixed one. Many vessels were booked with options to store several weeks ago are only now starting to do so. Many of those will keep storing because they were booked for a fixed period of several months, according to Eugene Lindell, an oil market analyst at consultant JBC Energy GmbH. But some of the storage that’s being discontinued had been happening for logistical reasons — a ship might have been running late unloading because the receiving terminal wasn’t ready, allowing the vessel’s owner to charge an expensive waiting fee known in the shipping industry as demurrage.
Oil prices rise more than $1 ahead of WTI June contract expiry — Oil prices climbed by more than $1 a barrel on Monday to their highest in more than a month, supported by ongoing output cuts and signs of gradual recovery in fuel demand as more countries ease curbs imposed to stop the coronavirus pandemic spreading. Brent crude was up $1.19, or 3.7%, at $33.69 a barrel by 0240 GMT, after touching a high since April 13. U.S. West Texas Intermediate crude was up $1.26, or 4.3%, at $30.69 a barrel, after rising to its highest since March 16. The June WTI contract expires on Tuesday, but there was little sign of WTI repeating the historic plunge below zero seen last month on the eve of the May contract’s expiry amid signs that demand for crude and derived fuels is recovering from its nadir. Production is also falling as U.S. energy firms cut the number of oil and natural gas rigs operating to an all-time low for a second consecutive week. That partly helped ease concerns about the WTI contract’s delivery point in Cushing, Oklahoma, running out of space. “Given particularly that surprise draw that we saw on inventories last week in the U.S., it seems unlikely that those concerns about storage facilities will reassert themselves,” The Chicago Mercantile Exchange, which hosts trading in WTI futures, brokerages and the United States Oil Fund LP, the largest oil-focused exchange-traded product in the country, have all taken steps that reduce open positions ahead of the WTI contract’s expiry.. Also supporting oil prices are production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, a grouping known as OPEC+. The world’s top exporter Saudi Arabia announced last week that it would cut an additional 1 million barrels per day in June, while OPEC+ wants to maintain existing oil cuts beyond June when the group is next due to meet. Kuwait and Saudi Arabia have agreed to halt oil production from the joint Al-Khafji field for one month, starting from June 1, Kuwait’s Al Rai newspaper reported on Saturday.
Oil jumps 11% to $32 as June futures contract nears expiration – West Texas Intermediate for June delivery jumped more than 9% on Monday to a two-month high, one day ahead of the contract’s expiration, as production cuts and the easing of stay-at-home restrictions supported prices. “Producers are significantly throttling back output and, with demand increasing, the market is on a slow path towards recovery,” said Rystad Energy’s senior oil markets analyst Paola Rodriguez Masiu. “Faced with meager demand and unattractive low prices, production curtailments came faster and deeper than initially anticipated.” WTI, the U.S. benchmark, surged 11.6%, or $3.43, to trade at $32.86 per barrel. International benchmark Brent crude, which has already rolled to the July contract, traded 7.5% higher at $34.93 per barrel. Monday’s jump is in sharp contrast to just one month ago when, on the day before the contract for May delivery expired, prices plunged below zero and into negative territory for the first time in history. With much of the world still on lockdown and storage rapidly filling, people were worried that there would be nowhere to put the oil. The contract holders were left scrambling and ultimately would do anything – in this case, even pay to have it taken off their hands. Since then, demand has begun to recover, and worldwide suppliers have reduced output in an effort to support the market. OPEC and its oil-producing allies took 9.7 million barrels per day offline beginning on May 1, and Saudi Arabia, Kuwait and UAE are among the group’s nations that have said they will voluntarily cut production further. Beginning in June OPEC de facto leader Saudi Arabia said it would take an additional 1 million bpd offline. In the U.S., data from the Energy Information Administration last week showed that production has dropped 1.5 million bpd below March’s all-time high level of 13.1 million bpd. Gasoline demand has also started to show signs of recovery as states begin to reopen economies. The more actively traded WTI contract for July delivery jumped 8% to trade at $31.89, while the contract for August delivery traded 7.4% higher at $32.33. Oil is coming off its third straight week of gains, but prices are still well below January’s high, when WTI traded above $60 per barrel.
Traders feared June oil futures would go negative, instead they expire Tuesday possibly above $30 — This time last month, investors were watching the futures market in disbelief. The May contract for West Texas Intermediate oil was set to expire, and prices did the unthinkable – they plunged 300% in one day, deep into negative territory. In the spot market all across North America, prices also turned negative, meaning people literally couldn’t even give oil away. There were dire forecasts of much more pain ahead, and a recurrence of the wild trading was feared for the June contract. But now the outlook is much improved, as the June contract is set to expire Tuesday. The world has changed, and the ugly crisis created by both oversupply and a sudden lack of demand is beginning to reverse. Helima Croft said the “green shoots of recovery in place,” as Chinese and U.S. demand are improving, and OPEC plus ended its feuding and agreed to sharply cut output. China has been buying more oil, and its demand is clearly strengthening. U.S. drivers are getting back into their cars as coronavirus shutdown restrictions lift. On the supply side, Saudi Arabia last week added another 1 million barrels a day cut of its own to the OPEC plus deal for a 9.7 million barrel reduction, and America’s oil industry has cut its production quickly and sharply. Oil prices jumped sharply Monday, rising on the positive developments and a rally in risk markets sparked by Fed Chairman Jerome Powell’s comments that the Fed will can do more to support markets and the economy. WTI futures for June were up 7.4% at $31.62 per barrel in afternoon trading. Now, the demand side of the market and the supply side are improving in tandem, to reduce the oil glut that was close to filling all available storage facilities, including ships at sea. The fact that the world was running out of places to store oil in April was behind the sharp drop in the futures contract. Investors were unable or unwilling to take delivery of oil, and there were also investors who became trapped in the trade as the selling spiraled. Interactive Brokers took a $109.3 million hit to cover its customers’ losses. Oil is now trading above $30 for the first time since March 17, and RBOB gasoline futures have risen above $1 per gallon for the first time since March 13. As the June contract gets set to expire, the landscape has changed dramatically for the U.S. oil industry. U.S. production was at a record high in March, and has cut back by 1.5 million barrels a day in just about six weeks, to 11.6 million barrels a day, according to the Energy Information Administration’s latest weekly data. Analysts expect production could be down by another 500,000 to 1 million barrels soon. “This is a remarkable plunge in activity. … It’s pretty clear the U.S. is now the swing producer.” Baker Hughes reported that another 34 oil rigs went out of service last week, leaving just 258 active oil rigs, about a third of the rig count last year. “Storage at Cushing actually fell last week. That was the whole mechanism last month that drove the negative pricing,” said Kilduff. “There were barrels to take in and no place to put them.” Cushing, Oklahoma is the storage hub for WTI, so the market watches storage levels there closely.
Oil steady on signs of output cuts – Oil prices were steady on Tuesday amid signs that producers are cutting output as promised while traders awaited more clarity on the demand picture as some countries ease out of lockdowns. Benchmark Brent crude rose 43 cents, or 1.26%, to trade at $35.25 per barrel. The front-month contract for West Texas Intermediate crude, which is set to expire on Tuesday, was up $1.27, or 4%, at $33.09 per barrel. The July contract, which was trading at vastly higher volumes, was up one cent at $31.75 a barrel. “A powerful cocktail made of bullish ingredients have been supporting the oil market for a month … Demand is improving, supply is decreasing,” “This improvement in sentiment, however, is expected to be relatively short-lived … economic output will grow compared to the current quarter but will be well below the levels expected at the beginning of the year,” Varga added. Global demand recovery is expected to be slow as some restrictions remain and there is a significant risk of repeat outbreaks and lockdowns. The Eurasia group urged caution on oil consumption, citing “a global recession, cautious consumers, and a later and potentially worse peak of the coronavirus outbreak in emerging markets such as Latin America, Africa, and South Asia”. There was little sign of a repeat of the historic plunge below zero seen last month ago on the eve of the May contract’s expiry amid signs of rising demand for crude and fuels. The market was boosted earlier by signs that output cuts agreed by the Organization of the Petroleum Exporting Countries (OPEC) and others including Russia, a group known as OPEC+, are being implemented. OPEC+ cut its oil exports sharply in the first half of May, companies that track shipments said, suggesting a strong start in complying with their latest pact to curb output. U.S. production is also falling, with crude output from seven major shale formations expected to fall to 7.822 million barrels per day in June, the lowest since August 2018, according to the U.S. Energy Information Administration. A recovery in fuel demand in India also gathered momentum in the first half of May.
WTI Extends Gains After Large Surprise Crude Draw – Oil prices were higher on a choppy day as WTI June rolled into July as traders weighed supply cuts and a demand rebound against an ominous economic outlook from the Fed.On the bright side… “The demand side has come off the low, the supply side is still falling,” said Peter McNally, global lead for industrials, materials and energy at Third Bridge.“That has led to this bounce back in the prices.”However, reality is still a concern…“People are still locked down and there are still a lot of people without jobs right now,” “It’s really going to fall on the next two weeks of seeing if these states that have opened up, is there going to be an increase in cases.”And so tonight’s API inventory data will be keenly watched for any continuatiojn of last week’s surprise draws, or a switch back to builds…API:
- Crude -4.8mm (+2.4mm exp) – biggest draw since 12/29
- Cushing -5.0mm – a record draw
- Gasoline -651k (-3.5mm exp)
- Distillates +5.1mm (+3.2mm exp)
After 15 straight weekly builds, crude stocks drew down very modestly in the prior week, but last week saw a notable 4.8mm barrel drawdown – the biggest draw since 2019… (and a record 5mm drop in Cushing stocks)
Oil rises on signs of firmer demand, fall in U.S. crude stocks – Oil prices rose on Wednesday amid signs of improving demand and a drawdown in U.S. crude inventories but worries over the economic fallout from the coronavirus pandemic capped gains. Brent crude futures for July delivery were up 23 cents, or 0.7%, at $34.88 per barrel at 0347 GMT. U.S. West Texas Intermediate (WTI) crude futures for July were up 14 cents, or 0.4%, at $32.10 a barrel. The July contract closed on Tuesday at $31.96, up 1%. The June contract expired on Tuesday at $32.50 a barrel, up 2.1%, as the WTI futures market avoided the chaos of last month’s May expiry, when prices sank below zero. Oil prices have mainly risen during the past three weeks, with both benchmarks climbing above $30 for the first time in more than a month on Monday, supported by massive output cuts by major oil producing countries and signs of improving demand. U.S. crude inventories fell by 4.8 million barrels to 521.3 million barrels in the week to May 15, data from industry group the American Petroleum Institute (API) showed on Tuesday. Refinery runs rose by 229,000 barrels per day, the API said, a sign that plants are trying to produce more fuel as the United States eases its lockdowns put in place to halt the spread of the novel coronavirus. Official data from the Energy Information Administration (EIA) is due at 10:30 a.m. (1430 GMT) on Wednesday. “Oil markets have worried about high crude inventories but yesterday the WTI June contract expired and rolled over to July smoothly as concerns over crude stocks ease and demand has improved in the short-term,” said Kim Kwang-rae, commodity analyst at Samsung Securities in Seoul.
WTI Tumbles Despite Record Drop In Cushing Stocks – After WTI’s roll from June to July, oil prices have continued their explosion higher, accelerating this morning after last night’s surprise crude draw from API. This is the fifth day higher in a row, with July WTI topping $33.50 despite vaccine expectations falling and little to no positive economic headlines. The market is clearly hope-filled… “Demand is now clearly on its way back from extremely low levels in April,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “The direction for oil is most likely still higher from here.” However, as Bloomberg Intelligence Energy Analyst Fernando Valle, warns, while opening of different states and increased traffic point to recovery in gasoline demand; with Latin America’s economic situation worsening, exports will be subdued and contribute to a growing glut in refined products, particularly diesel. DOE:
- Crude -4.982mm (+2.4mm exp)
- Cushing -5.587mm – a record weekly draw
- Gasoline +2.83mm (-3.5mm exp)
- Distillates +3.831mm (+3.2mm exp)
After 15 straight weeks of builds, the streak broke last week and this week saw crude draw even bigger (the most since 2019). Cushing saw its biggest draw on record as gasoline and distillate saw unexpected builds…
Oil jumps nearly 5% on firmer demand, surprise drop in U.S. stockpile – Oil prices firmed on Wednesday on signs of improving demand and a drawdown in U.S. crude inventories, but worries over the economic fallout from the coronavirus pandemic and weak refining margins capped gains. West Texas Intermediate July crude futures gained $1.53, or 4.79%, to settle at $33.49 per barrel. Brent crude futures rose $1.10, or 3.2%, to settle at $35.75 per barrel. The WTI June contract expired on Tuesday at $32.50 a barrel, up 2.1%, avoiding the chaos of last month’s May expiry, when prices sank well below zero. Data from the U.S. Energy Information Administration showed that for the week ending May 15 inventory dropped by 5 million barrels. According to estimates from FactSet, analysts had been expecting a build of 1.8 million barrels. Easing of lockdown restrictions worldwide are boosting demand for fuels, while initial shipping data shows that compliance with oil production cuts from the Organization of the Petroleum Exporting Countries and its allies has been strong so far. But weak crude refining profits persist, which could delay a recovery in oil demand. “We would need to see strength in refinery margins in order to persuade refiners to increase utilisation rates, but at current levels there seems little incentive for them to do so, with many regions still seeing negative margins,” Refiners are pinning hope on easing of lockdowns boosting gasoline demand. Lingering concerns about the economic fallout from the coronavirus pandemic, especially in the United States which is the world’s biggest oil consumer, kept a lid on further gains. U.S. Federal Reserve Chair Jerome Powell said on Tuesday layoffs by state and local governments will slow the U.S. economic recovery. U.S. crude inventories fell by 4.8 million barrels to 521.3 million barrels in the week to May 15, data from the American Petroleum Institute (API) showed on Tuesday. Refinery runs rose by 229,000 barrels per day, the API said, indicating plants are trying to produce more fuel as the United States eases its lockdowns.
Oil jumps to highest level since March on lower U.S. inventories, recovering demand – Oil prices rose to the highest level since March on Thursday, supported by lower U.S. crude inventories, OPEC-led supply cuts and recovering demand as governments ease restrictions imposed on people’s movements due to the coronavirus crisis. Crude prices have slumped in 2020, with Brent hitting a 21-year low below $16 a barrel in April as demand collapsed. With fuel use rising and more signs that the supply glut is being tackled, Brent has since more than doubled. Brent rose 31 cents, or 0.87%, to settle at $36.06 per barrel, while West Texas Intermediate crude gained 43 cents, or 1.28%, to settle at $33.92 per barrel. “Global supply has been curtailed to a great degree,” said Rystad Energy analyst Paola Rodriguez Masiu. “We are on a clear path to a gradual recovery now.” In the latest sign the supply glut is easing, U.S. crude inventories fell 5 million barrels last week. Analysts had expected an increase. “The rally in the crude futures is beginning to approach levels in which U.S. shale production declines will begin to slow and possibly reverse as low cost producers attempt to generate revenue,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report. At the same time, there is evidence of recovering fuel use. Top U.S. airlines and Air Canada (AC.TO) on Tuesday reported slower ticket cancellations and an improvement in bookings on some routes, though executives said overall demand remained weak. The Organization of the Petroleum Exporting Countries, Russia and other allies, known as OPEC+, agreed to cut supply by a record 9.7 million barrels per day from May 1. So far in May, OPEC+ has cut oil exports by about 6 million bpd, according to companies that track the flows, suggesting a strong start in complying with the deal. OPEC says the market has responded well.
Oil falls on China-U.S. tensions, energy demand doubts – (Reuters) – Oil prices tumbled about 2% on Friday on rising U.S.-China tensions and doubts about how quickly fuel demand would recover from the coronavirus crisis. Fuel demand plummeted in recent months as the pandemic caused governments to impose restrictions on movement and businesses closed their doors. Oil has rallied in recent days as activity started to resume. But prices dropped after China said on Friday it would not publish an annual growth target for the first time. Beijing also pledged more government spending as the pandemic kept hammering the economy. “The coronavirus has nullified a decade of global oil demand growth and the recovery will be slow,” said Stephen Brennock of broker PVM. Brent crude futures fell 93 cents, or 2.6%, to settle at $35.13 a barrel. U.S. West Texas Intermediate (WTI) crude ended 67 cents, or 2%, lower at $33.25 a barrel. China is set to impose new national security legislation on Hong Kong after last year’s pro-democracy unrest, a Chinese official said on Thursday, drawing a warning from President Donald Trump that Washington would react “very strongly.” For the week, Brent and WTI gained 8% and 13%, respectively, but some said they may have come too far, too fast. “A second wave (of the coronavirus) is not such a remote possibility and a new round of lockdowns could send prices back to much lower levels very quickly, and the market knows it,” said Rystad Energy senior oil markets analyst Paola Rodriguez Masiu. Oil prices have plummeted more than 40% so far in 2020. The recent rebound was due in part to efforts by the Organization of the Petroleum Exporting Countries and allies to reduce supply. OPEC+ is reducing supply by a record 9.7 million barrels per day from May 1.
Is The Oil Rally Coming To An End? — The long rally for oil prices came to a halt on Friday over fears about a slower-than-expected economic recovery in China. The Chinese government broke with tradition and declined to set a growth target for 2020 due to “great uncertainty.” Markets were also disappointed with the tepid size of government stimulus from Beijing. Meanwhile, rising U.S.-China tension adds to the concerns. Despite questions about economic growth, China’s oil imports are set to rise by about 2 percent this year. In fact, China’s oil demand is already back to about 90 percent of pre-pandemic levels. Continental Resources asked North Dakota regulators to order mandatory production cuts or flaring limits. One of the world’s largest oil fields may need to shut down because dozens of workers have been infected by the coronavirus. The Tengiz oil field, produces 500,000 bpd in Kazakhstan, faces a potential closure, the government said. Almost 950 workers at the site have tested positive. The oil majors only closed 3 renewable energy deals in the first quarter, compared to 17 in the same quarter a year earlier. Shell said that it evacuated around 60 foreign staff from Iraq’s Basra Gas Company as a security precaution following a protest over pay. . All international companies operating in Angola – Total, Chevron, ExxonMobil,BP, and Eni – have idled or scrapped drilling rigs in the country, according to Reuters. “We have suspended all our drilling activities like all other operators in Angola,” Total said in a statement. Total makes up half of Angola’s output. The Argentine government fixed domestic oil prices at $45 per barrel in an attempt to prevent a collapse of its oil industry. The price would be voided if Brent moves above $45 for 10 days. The policy will last until the end of 2020, but there are questions about its efficacy. The collapse in demand means there is already a surplus, leaving little room for drillers to ramp up. Meanwhile, YPF (NYSE: YPF) said it would ditch plans to expand LNG exports from the country.
Oil prices settle lower on fears about China turbulence, but score a weekly gain – – Oil futures settled lower Friday, with U.S. prices breaking the longest winning streak in more than a year over worries about China growth and fresh friction between Washington and Beijing. Oil prices declined “thanks to growing doubts over the strength of China’s economic recovery, while rising tensions between the Beijing and Washington hit the commodity further,” said Lukman Otunuga, senior research analyst at FXTM. “Although oil may find support as economies relax lockdown measures, upside gains are destined to be capped by rising fears over slowing global growth and geopolitical tensions,” he told MarketWatch. “Looking at the technical picture, WTI crude could slip back towards $24 if $30 gives way,” he said. July West Texas Intermediate oil fell 67 cents, or 2%, to settle at $33.25 a barrel on the New York Mercantile Exchange. On Thursday, the contract posted a gain for a sixth straight session – the longest since February 2019, according to Dow Jones Market Data. Prices rose 1.3% Thursday to settle at $33.91 – the highest since March 10, based on the front-month contracts. Global benchmark Brent crude for July delivery lost 93 cents, or 2.6%, to $35.13 a barrel on ICE Futures Europe. For the week, WTI crude finished 12.6% higher and Brent tacked on 8.1%, with both benchmarks marking their fourth weekly advance in a row. Investors were rattled by concerns of fresh unrest in Hong Kong after news the Chinese government is considering a sweeping national security law that could curtail the territory’s autonomy. President Donald Trump told reporters on Thursday that the U.S. would react “strongly” toward those moves on Hong Kong. Last year saw increasingly violent protests in the financial hub, though the coronavirus outbreak slowed some of that activity. Against that backdrop, global equities and U.S. benchmark stock indexes mostly declined. The Dow Jones Industrial Average DJIA, -0.03% was down in late-Friday dealings as gold futures settled. Investors may also be wary of holding on to perceived riskier assets such as stocks and oil ahead of the long holiday weekend in the U.S. and U.K.
Oil drops 2%, but still posts fourth straight week of gains – Oil prices tumbled on Friday on rising U.S.-China tensions and doubts about how quickly fuel demand would recover from the coronavirus crisis. Fuel demand plummeted as the coronavirus pandemic caused governments to impose restrictions on movement and businesses closed their doors. Oil has rallied in recent days as activity starts to resume, but prices dropped after China said on Friday it would not publish an annual growth target for the first time. Beijing also pledged more government spending as the pandemic kept hammering the economy. “The coronavirus has nullified a decade of global oil demand growth and the recovery will be slow,” said Stephen Brennock of broker PVM. Brent crude fell 93 cents, or 2.58%, to settle at $35.13 per barrel, after gaining nearly 1% on Thursday. West Texas Intermediate crude dropped 67 cents, or 1.98%, to settle at $33.25 per barrel, having gained more than 1% in the last session. China is set to impose new national security legislation on Hong Kong after last year’s pro-democracy unrest, a Chinese official said on Thursday, drawing a warning from President Donald Trump that Washington would react “very strongly.” Brent and U.S. crude were set for 8% and 12% weekly gains, respectively, but some said they may have come too far, too fast. “A second wave (of the coronavirus) is not such a remote possibility and a new round of lockdowns could send prices back to much lower levels very quickly, and the market knows it,” said Rystad Energy senior oil markets analyst Paola Rodriguez Masiu. Oil prices have plummeted more than 40% so far in 2020, rebounding in part due to efforts by OPEC+ to reduce supply. The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, are reducing supply by a record 9.7 million barrels per day from May 1 to support the market. In a sign of the glut easing, U.S. crude inventories fell last week. Gasoline demand is rising and some airlines are planning for a return of European travel. The U.S. rig count, an early indicator of future output, fell by 21 to a record low 318 in the week to May 22, according to data on Friday from energy services firm Baker Hughes Co going back to 1940.
Fresh Rocket Attack On US Embassy In Baghdad Amid Renewed Anti-America Protests – After months of the world’s attention focused on the pandemic and resulting national shutdowns and economic pauses, the fact that the US and Iran were only months ago almost at war in Iraq seems a world away. But a proxy war pitting Iranian-backed Shia paramilitary fores in Iraq against US interests and allies has continued unabated, threatening once again to draw in American military intervention.In the latest instance, multiple rockets were fired on the US embassy in Baghdad Tuesday morning. “A rocket struck Baghdad’s heavily fortified Green Zone, the seat of Iraq’s government, early on Tuesday morning, according to an Iraqi military statement, the first attack on the area since a new prime minister was sworn in earlier this month,” AP reports.”An Iraqi official said the rocket had struck near the US Embassy, without elaborating,” the report notes. Local media said in total three rockets were launched toward the embassy – though it’s rarely the case they hit their intended target. Sirens could be heard blaring throughout the central secured area.While it’s not the first such attack on Baghdad’s high secured ‘Green Zone’ of the past months, it comes amid renewed street protests and popular outrage triggered by accusations that MBC media – a major Middle East broadcaster seen as aligned to Western interests (given it first launched from London before moving to Dubai) – insulted the memory of Abu Mahdi al-Muhandis, the Iraqi paramilitary leader killed alongside IRGC Quds Force chief Qassem Soleimani by US drone strike on Jan. 3.
Shell evacuates foreign staff from Iraq’s Basra Gas project: executives – (Reuters) – Royal Dutch Shell evacuated some 60 foreign staff from Iraq’s Basra Gas Company as a security measure following a protest over delayed pay, company officials said on Thursday, adding production was unaffected. The staff were flown out of the country on Wednesday after workers protested at the headquarters of Basra Gas Company (BGC), a venture between state-owned South Gas Company, Shell and Mitsubishi (8058.T), to demand payment of their delayed salaries, officials said. “Shell confirms that as result of a security breach at the accommodation camp of Basra Gas Company, we have temporarily relocated Shell secondees,” Shell said in emailed comments. “All staff and contractors are safe and BGC production is not impacted,” Shell said. It said the staff, evacuated for security reasons, would work remotely and it did not anticipate any short-term impact on production from the Basra Gas Company, which project officials say is around 900 million standard cubic feet per day. Shell said it was working with its Iraqi state partner to solve the pay issue and hoped the evacuated staff could resume work onsite as soon as possible. Iraqi officials, speaking on condition of anonymity, also said they were seeking a quick solution to pay the delayed salaries and that the gas project, overseen by Iraqi engineers, was functioning normally.“Shell’s evacuation is a precautionary and temporary measure and its foreign staff will provide advice and perform their duties remotely for now,” a senior Basra Gas Company official said. Iraqi officials providing security at the Basra Gas Company said Wednesday’s protest, which was also close to a Shell compound, was limited and under control. Most energy companies in Iraq’s south cut wages or laid off workers to cut costs after oil prices fell because of the coronavirus crisis. In April, benchmark Brent crude LCOc1 fell to its lowest levels in more than 20 years.
Exclusive: In veiled warning to Iran, U.S. tells Gulf mariners to stay clear of its warships (Reuters) – In an alert that appeared aimed squarely at Iran, the U.S. Navy issued a warning on Tuesday to mariners in the Gulf to stay 100 meters (yards) away from U.S. warships or risk being “interpreted as a threat and subject to lawful defensive measures.” The notice to mariners, which was first reported by Reuters, follows U.S. President Donald Trump’s threat last month to fire on any Iranian ships that harass Navy vessels. “Armed vessels approaching within 100 meters of a U.S. naval vessel may be interpreted as a threat,” according to the text of the notice, which can be seen here here (bit.ly/36msOL2). A U.S. official, speaking on condition of anonymity, said the new notice to mariners was not a change in the U.S. military’s rules of engagement. The Pentagon has stated that Trump’s threat was meant to underscore the Navy’s right to self-defense. The Bahrain-based U.S. Naval Forces Central Command said in a statement that its notice was “designed to enhance safety, minimize ambiguity and reduce the risk of miscalculation.” It follows an incident last month in which 11 Iranian vessels came close to U.S. Navy and Coast Guard ships in the Gulf, in what the U.S. military called “dangerous and provocative” behavior. At one point, the Iranian vessels came within 10 yards (9 meters) of the U.S. Coast Guard cutter Maui, the U.S. military said. Trump’s threat followed that incident, which Tehran, in turn, said was the fault of the United States. The head of Iran’s elite Revolutionary Guards responded to Trump by threatening to destroy U.S. warships if its security is threatened in the Gulf.
Yemen conflict: Saudi Arabia’s botched war – – Despite more than five years of military intervention in Yemen, the Saudi-led coalition’s campaign has failed to save the country from disintegration. The Southern Transitional Council (STC), backed by the United Arab Emirates, now occupies the important port of Aden, and, to the dismay of Saudi Arabia, has declared self-rule over the south. But this de facto partition ultimately may not reduce instability in Yemen and the region.In fact, Yemen already is effectively divided into three territorial entities. The Saudi-backed government of President Abdu Rabbuh Mansour Hadi, now exiled, and the Iran-backed Houthi rebels control the other two. This has prolonged the fighting – described as “a civil war within a civil war” – with profound geostrategic implications.The conflict has persisted since early 2015, when the Arab coalition, comprising of Saudi Arabia and eight other countries, including the UAE, launched a massive military intervention. The main architect was Saudi Crown Prince Mohammed bin Salman (MbS), now the kingdom’s de facto ruler. A crucial supporter was the equally forceful Mohammed bin Zayed (MBZ), Crown Prince of the Emirate of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces. MbS’s objective was twofold. One was to strengthen his position within the royal family in order to succeed his father, the ageing King Salman bin Abdulaziz al-Saud. The other was to restore Hadi’s rule, which ended in September 2014, when fighters from the minority Zaidi-Shia Houthis took over Yemen’s capital, Sana’a, and drove him out. MbS also wanted to demonstrate to Shia Iran that Sunni Saudi Arabia – the site of Islam’s two holiest shrines – would no longer be a passive power and would not tolerate expansion of Iranian influence in the region, especially up to the Saudi border. MbS’s anti-Iranian aim resonated with MbZ and other allies, who formed a counterweight to the Islamic Republic. U.S. President Barack Obama’s administration was in the process of negotiating the Iran nuclear deal, which was signed in July 2015. While the ongoing talks made Obama hesitant about the Saudi-led intervention, America’s traditional alliance with the kingdom won out, and the U.S. backed the coalition.
Sjursen- What On Earth Is The US Doing By Bombing Somalia? – Maj. Danny Sjursen, USA (ret.) – The Trump administration has quietly ramped up a vicious bombing – and covert raiding – campaign in Somalia amid a global coronavirus pandemic. Neither the White House nor the Pentagon has provided any explanation for the deadly escalation of a war that Congress hasn’t declared and the media rarely reports. At stake are many thousands of lives. The public statistics show a considerable increase in airstrikes from Obama’s presidency. From 2009 to 2016, the U.S. military’s Africa Command (AFRICOM) announced 36 airstrikes in Somalia. Under Trump, it conducted at least 63 bombing raids just last year, with another 39 such attacks in the first four months of 2020. The ostensible US target has usually been the Islamist insurgent group al-Shabab, but often the real – or at least consequent – victims are long-embattled Somali civilians.As for the most direct victims, it’s become clear that notoriously image-conscious AFRICOM public affairs officers have long undercounted and underreported the number of civilians killed in their expanding aerial bombardments. According to Airwars, a UK-based airstrike monitoring group, civilian fatalities – while low relative to other bombing campaigns in Iraq, Afghanistan, or Syria – may exceed official Pentagon estimates by as much as 6,800 percent. Only these deaths don’t tell the half of it. Tens of thousands of Somalis have fled areas that the US regularly bombs, filtering into already overcrowded refugee camps outside of the capital of Mogadishu.There are approximately 2.6 million internally displaced persons (IDPs) in Somalia who barely survive and are often reliant on humanitarian aid. So vulnerable are the refugees in the pandemic-petri-dish camps, that one mother of seven described feeling “like we are waiting for death to come.” Her fears may prove justified. Recently, coronavirus cases have risen rapidly in Somalia – a country with no public health system to speak of – and due to severely limited testing availability, experts believe the actual tally is much higher than reported. No matter how AFRICOM spins it, their escalatory war will only exacerbate the country’s slow-boiling crisis.
Venezuela To ‘Protect’ 5 Inbound Iranian Tankers With Ships & Planes Military Escort – Though largely off the mainstream media’s radar amid all things pandemic related, we’ve been closely following the saga of Iran’s provocatively sending five fuel-laden tankers to gasoline-starved Venezuela, despite repeat and growing threats of US intervention against the brazen sanctions-busting mission. And now surely escalating matters from Washington’s point of view, the Maduro government has vowed it will provide navy ships and military aircraft to escort the inbound Iranian fuel tankers. Defense Minister Vladimir Padrino said on Wednesday that the military escort will be prepared to defend the ships once they enter Venezuela’s Exclusive Economic Zone (EEZ), which extends 200 miles off the coast – this after Trump was previously reported to have ordered a US naval build-up in the Caribbean in order to thwart sanctions-busting and narco-trafficking conducted by the Latin American country.“When they enter our exclusive economic zone, they will be escorted by Bolivarian National Armed Forces boats and planes to welcome them in and thank the Iranian people for their solidarity and cooperation,” Padrino said on state television.He underscored that he was closely coordinating with Iran’s defense minister, also after Washington has focused on the sanctioned Iranian airline Mahan Air’s flights in and out of Caracas of late, said to be carrying vital equipment for Venezuela’s derelict fuel refineres, needed for domestic gas consumption. Meanwhile, Reuters details that the tankers are expected to arrive within the next weeks:The tankers – Fortune, Forest, Petunia, Faxon and Clavel – are carrying around 1.5 million barrels of fuel, and passed the Suez Canal in the first two weeks of May, Refinitiv Eikon data show. They are expected to arrive in Venezuela between late May and early June. To be expected, US-backed opposition leader and self-proclaimed ‘Interim President’ Juan Guaido is focusing outrage on the presence of Iranians in propping up the Maduro regime.
France, UN envoys warn Israel against partial annexation of West Bank –France is working with other European nations to dissuade Israel from a partial annexation of the occupied West Bank, its foreign minister said Wednesday, as the UN’s Mideast envoy warned Israel against “closing the door” to negotiations.Israeli Prime Minister Benjamin Netanyahu has said cabinet discussions will start in July over extending Israeli sovereignty to Jewish settlements and the Jordan Valley in the West Bank, as wasmooted under US President Donald Trump’s Middle East peace plan.A partial annexation of the West Bank would constitute a serious violation of international law, French Foreign Minister Jean-Yves Le Drian said at a parliament hearing on Wednesday.Le Drian said France was working with European partners to come up with a joint action plan for prevention and reprisal should Israel make such a move.”For the past few days we have held several video conferences with European colleagues (…) with a view to deciding on a joint preventive action and eventually a reprisal if such a decision were taken,” he said.Also on Wednesday, the UN’s Middle East envoy warned that an Israeli move to annex parts of the West Bank would “close the door” to negotiations.”The continuing threat of annexation by Israel of parts of the West Bank would constitute a most serious violation of international law, deal a devastating blow to the two-state solution, [and] close the door to a renewal of negotiations,” Nickolay Mladenov told the UN Security Council.”Israel must abandon its threat of annexation. And the Palestinian leadership [must] re-engage with all members of the quartet,” he said, referring to the United States, Russia, the European Union and the United Nations.
Palestinian Prime Minister Calls on Ministries to Take ‘Actual Steps’ to Cut Ties With US, Israel | Al Bawaba –Palestinian Prime Minister Mohammad Shtayyeh urged the cabinet Wednesday to implement decisions on cutting relations with the US and Israel. According to the official WAFA news agency, Shtayyeh ordered all ministries at the extraordinary cabinet meeting to take actual steps and urgent measures regarding decisions of President Mahmoud Abbas.On Tuesday, Abbas said the country is terminating all agreements and understandings signed with Israel and the US, including on security.He said they hold the US administration responsible for the occupation of the Palestinian people and consider it a key partner in Israel’s actions and decisions against the rights of the Palestinians.Shtayyeh also called on the international community to fulfill its responsibilities and to provide the Palestinian people with international protection. Israel is expected to annex parts of the West Bank on July 1, as agreed between Prime Minister Benjamin Netanyahu and Benny Gantz, the head of the Blue and White party.
Chinese Ambassador to Israel Found Dead in His Home – WSJ -China’s ambassador to Israel was found dead Sunday in his residence north of Tel Aviv, Israeli officials said.The cause of Ambassador Du Wei’s death wasn’t immediately clear. Police were on the scene at his home in the beachside city of Herzliya to investigate it, but officials said initial indications didn’t suggest foul play. Israeli media reported he might have died of a heart attack.Mr. Du, 57, was a career diplomat who had been actively publicizing China’s positions on the coronavirus pandemic since arriving in Israel in February. Chinese state media reported late Sunday that preliminary evidence suggests that Mr. Du died of health complications, but said that further investigation was still required.China’s Foreign Ministry didn’t immediately respond to a request for comment.Israel has of late been caught in the escalating tensions between China and the U.S. The Trump administration has pressed Israel to take a tougher line on China, particularly on Beijing’s investments in Israeli infrastructure and companies.Last year, Israel set up an interagency government body to oversee sensitive commercial deals involving foreign companies akin to the U.S.’s Committee on Foreign Investment, or Cfius. The panel is in early stages of operation. But Israel hasn’t echoed the U.S. in criticism of China’s handling of the pandemic. While receptive to American concerns, Israel also sees China as an important market for Israeli companies and products as well as a source of foreign investment.
Pompeo Accuses China Of Helping Iran’s ‘Gas For Gold’ Sanctions-Busting In Venezuela -We predicted earlier that the United States is headed for another ‘tanker war’ with Iran, but unlike last summer this will take place far away from Persian Gulf and Mediterranean waters, instead in the Caribbean off Venezuela’s coast, however unusual that scenario might be. Recall that Trump recently ordered a US naval build-up there to boot.Currently there are five Iranian-flagged tankers transporting fuel to Venezuela across the Atlantic Ocean, with plans to break the American blockade on the Latin American country. Iran has warned that any US attempt at intercepting its fuel tankers “would have serious repercussions for the Trump administration ahead of the November elections.”But Washington appears ready to do just that, also as the growing number of Iranian supply flights to Caracas via Iran’s US-sanctioned Mahan Air is gaining attention. To get Venezuela’s derelict refineries up and running to meet domestic gas consumption, vital parts are needed – a role that Tehran has stepped up to fill. But in a new twist to the imminent geopolitical showdown, the US has freshly accused China of being part of the Iranian sanctions-busting scheme in Latin America. On Tuesday Secretary of State Mike Pompeo named China as helping to facilitate the scheme to ‘smuggle’ gold out of Caracas as payment for the inbound Iranian gasoline as well as refining supplies and support. The State Department specifically identified Chinese firm Shanghai Saint Logistics Limited, saying it’s now blacklisted the company for sanctions violations related to Iran and Venezuela. “The People’s Republic of China is one of the rapidly dwindling number of countries that welcomes Mahan Air, which ferries weapons and terrorists around the world for the Islamic Republic of Iran,” Pompeo announced. Washington has long considered Mahan as essentially a front for elite Islamic Revolutionary Guard Corps (IRGC) operations, but it’s the first time Beijing has been linked so forcefully to helping “ferry weapons and terrorists around the world” while assisting Mahan Air.
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