Written by rjs, MarketWatch 666
Here are some more selected news articles about the oil and gas industry from the week ended 04 July 2020. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening.
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Demand for oil is dry, but this bill may keep money going to energy companies – Texas and Oklahoma Republican Senators John Cornyn and Jim Inhofe are trying to shore up the oil industry and oil jobs in their states. As the pandemic has all but dried-up demand for oil, the senators have introduced a bill that would keep the money flowing to energy companies and keep oil and gas workers on the payroll. Texas provides about 40% of the nation’s oil and gas. Cornyn says all that oil is good for jobs, but when oil prices plummet it means “a lot of people are getting laid off jobs.” Cornyn and Inhofe’s bill, the “Save Jobs Act” would provide tax and regulatory relief for US energy companies hit hard by the pandemic. “Be ready when the economy starts to rebound, as we are already starting to see, that they will have those people in place so they can hopefully get back to business as soon as possible,” Cornyn said. “We are looking to provide additional liquidity and sort of a lifeline to help.” Inhofe says one in five jobs in his home state are directly tied to the energy industry. “I think we will all benefit from that, certainly Oklahoma will,” Inhofe said. “The companies have to keep going. We have to keep producing oil and gas.” Inhofe says the bill is only a short-term fix, but would incentivize companies who are tight on money to keep drilling.
Baker Hughes Rig Count Shows US Decrease – Baker Hughes Co. reported Thursday that the U.S. rotary rig count decreased by two drilling units this week. Based on the latest figure, 263 rigs were operating in the U.S. The number comprises 185 oil rigs, 76 gas rigs and two miscellaneous rigs. The number of oil rigs decreased by three week-on-week and the number of gas rigs increased by one during the period, Baker Hughes noted in a written statement emailed to Rigzone. The latest U.S. rig count represents a 700-rig decrease from the 963-rig figure a year ago, Baker Hughes added. The firm pointed out that, year-on-year, the number of oil rigs is down 603, gas rigs down 98 and miscellaneous rigs up by one. It also stated the U.S. offshore rig count is up one this week to 12 but down by 12 units compared to the same period in 2019. In Canada, the number of rigs jumped by five this week to 18, Baker Hughes noted. It pointed out the oil rig count increased by two to six units during the period and the gas rigs figure rose by three to 12. Canada’s 18-rig total for the week represents a 102-rig decrease from the year-ago level, Baker Hughes stated. Against the corresponding period in 2019, Canada’s oil rig and gas rig counts are down by 74 and 28 drilling units, respectively.
ConocoPhillips to Ramp Up Oil Production— ConocoPhillips said it will begin restoring curtailed oil production in July as crude prices rebound from their lockdown depths. The company will bring back output in Alaska and other states next month, with Canadian production coming back in the third quarter. “Given ongoing variability and uncertainty in the outlook for production curtailments, the company will continue to suspend forward-looking guidance and sensitivities,” Conoco said in a statement Tuesday. Conoco is the latest oil driller to turn on the taps after a pandemic-fueled collapse in crude prices spurred an unprecedented halt to significant portions of output. Earlier this month, Continental Resources Inc. said it would bring back a portion of its curtailed production in July, joining the ranks of restorationists that include Parsley Energy Inc. and EOG Resources Inc. West Texas Intermediate crude futures have more than doubled in the past two months and were hovering around $39 a barrel on Tuesday. In late April, they plunged into negative territory for the first time in history. Conoco said it will pump the equivalent of 960,000 to 980,000 barrels a day during the quarter that ends on Tuesday, excluding Libyan output, down from 1.3 million barrels during the first quarter.
New polling shows dramatically low levels of support for drilling in the Arctic National Wildlife Refuge – Alaska Native News – Recent attempts by the Trump administration to allow drilling in the Arctic National Wildlife Refuge and to bail out oil companies during the COVID-19 pandemic with taxpayer money, as well as its criticism of banks’ decisions not to fund Arctic oil and gas development, are hugely unpopular with American voters.According to newly completed public opinion research, drilling in the Arctic Refuge is incredibly unpopular across the political spectrum. Moreover, the notion of the federal government helping oil companies with taxpayer dollars and special allowances to exploit public lands for private profits is not popular with most Americans. And the recent movement by banks like Wells Fargo, Goldman Sachs and Morgan Stanley to commit to not funding drilling in the Arctic Refuge is supported by a broad swath of people.Climate Nexus Polling, in partnership with the Yale Program on Climate Change Communicationand the George Mason University Center for Climate Change Communication, conducted a nationally representative survey of 2,119 registered voters in the United States June 6-8, 2020. You can find the national poll crosstabs here and the toplines here.Only 1 in 5 think the Trump administration should open the Arctic Refuge for drilling by oil companies.An abysmal 22% of voters think the Trump administration should open the Arctic National Wildlife Refuge for drilling by oil companies – almost three times as many (61%) oppose this action. Only 19% of Independents and 17% of female respondents support the Trump administration’s efforts here, and even among Republicans 46% oppose oil drilling in the Arctic Refuge versus 35% that support Trump’s push. Voters, including large majorities of Republicans and Independents, overwhelmingly support banking policies that reject funding for Arctic oil and gas, including in the Arctic Refuge.
US oil, gas rig count falls 6 to 285 as industry begins to stabilize – After consecutive weeks of single-digit declines, the US oil and gas rig count may have essentially reached its long-awaited bottom. The US oil and gas rig count fell by six to 285 for the week ending July 1, Enverus data shows, following a one-rig decline the week prior. Upstream operators shed four oil rigs week on week, leaving 191, and lost two gas rigs, leaving 94. From here on, some “minor” fluctuations in rig counts may occur, what analysts call “noise,” but large weekly changes are not expected, said analyst Matt Andre of S&P Global Platts Analytics. “We’re going to see some slight up-and-down movements, but we’re really close to a bottom,” Andre said. “Oil is $40/b, and ConocoPhillips is talking about increasing oil production.” Based on its economic criteria, ConocoPhillips said June 30 it expects in July to begin restoring some of the 225,000 boe/d of production it curtailed during the second quarter. Restored volumes will be both in the Lower 48 and Alaska. Five of the eight largest US basins showed no weekly change in rig counts, and four of those basins – the Bakken Shale in North Dakota/Montana, the SCOOP/STACK in Oklahoma, the Utica Shale mostly in Ohio and the DJ Basin in Colorado – now have 10 active rigs or less. Years ago, the Bakken and the Eagle Ford in South Texas each had over 200 rigs running. On July 1, the Bakken had 10 rigs, unchanged on the week, while the Eagle Ford had nine rigs after losing two rigs from the previous week. The Permian Basin of West Texas/New Mexico, which boasted a rig count over 400 in January, is down to 140, with one rig shed from the previous week. “The horrendous second-quarter 2020 is finally behind us, with total drilling activity finishing [at] record-low levels,” investment bank Tudor Pickering Holt said in a June 29 investor note. The rig count averaged 411 in the second quarter, down 50% from 828 during Q1, according to Enverus data. “For reference, the worst quarterly decline during the 2015-16 downturn was around 35%,” Tudor Pickering Holt said. By comparison, Q2 2020’s sequential decline of 50% highlights “the sheer speed of the recent rig count fall-off.” Investment bank B. Riley FBR estimated the number of well completions decreased 36% in May over the prior month to 441. The recent peak was 781 in November 2016, it said.
Canadian exporter sentenced in US for breaching Iran embargo by secretly exporting oil and gas equipment – A Toronto export manager for a Mississauga company has been sentenced to prison in the United States for illegally exporting gas turbine engine parts to Iran, in violation of long-standing U.S. embargo and trade sanctions. Angelica O. Preti, 45, of Toronto, was sentenced to 18 months in prison in Columbus, Ohio, on Friday, according to the U.S. Attorney’s office in the Southern District of Ohio. Few details, however, are available – including details of the allegations against her or the date she was arrested – as the case is sealed by the court and remains “sensitive,” according to a Justice Department official. “Preti made a calculated decision to harm the United States by supplying enemies abroad,” U.S. Attorney David DeVillers said in a written statement. “Preti also attempted to cover up her crimes by directing the filing of false electronic export information, and attesting that the final destination of goods was not Iran. Preti also employed a number of additional methods to obscure the fact that Iran was the end-user for the shipments,” DeVillers said. U.S. authorities said that during Preti’s time as export operations manager at UE Canada Inc., the freight company was involved with 47 shipments exported from the U.S. Of those shipments, 23 were traced as destined for Iran. UE Canada is based in Mississauga, 5 kilometres west of Toronto Pearson Airport.
Shell to cut asset values by up to $22 billion after coronavirus hit – (Reuters) – Royal Dutch Shell plans to slash the value of its oil and gas assets by up to $22 billion after the coronavirus crisis hit demand for fuel and weakened the outlook for energy prices, the Anglo-Dutch energy company said on Tuesday. The writedown announcement came after Shell cut its forecast for energy prices into 2023 on expectations that sales will only recover slowly after the pandemic, adding to the company’s already bleak longer-term outlook for fossil fuel demand. Shell’s move follows similar steps by other major energy companies such as BP (BP.L), which plans to cut the value of its assets by up to $17.5 billion following the hit to fuel sales from global travel restrictions to prevent the virus spreading. Shell, which has a market value of $126.5 billion, said in an update ahead of second-quarter results due on July 30 that it would take an aggregate post-tax charge of $15 billion to $22 billion because of the writedowns. The charges relate to large liquefied natural gas (LNG)operations in Australia, including the Prelude floating LNG facility, the world’s biggest, as well as oil and gas production assets in Brazil and U.S. shale basins.
BP to Raise $5B via Petchems Business Sale – BP plc reported Monday that it has agreed to sell its global petrochemicals business to INEOS for a total consideration of $5 billion, subject to adjustments. The deal, which includes BP’s global aromatics, acetyls and related businesses, will enable the company to achieve its $15 billion divestment target a year ahead of schedule, BP noted in a written statement emailed to Rigzone. “Today’s agreement is another deliberate step in building a BP that can compete and succeed through the energy transition,” remarked BP CEO Bernard Looney. Under the agreement, INEOS will pay BP a $400 million deposit and subsequently pay $3.6 billion on completion, BP stated. The company added the remaining $1 billion will be deferred and paid in installments: “I recognize this decision will come as a surprise and we will do our best to minimize uncertainty. I am confident however that the businesses will thrive as part of INEOS, a global leader in petrochemicals.” stated Looney. From a strategic standpoint, limited overlap exists between BP’s petrochemicals business and the rest of BP, Looney continued. “(I)t would take considerable capital for us to grow these businesses,” he commented. “As we work to build a more focused, more integrated BP, we have other opportunities that are more aligned with our future direction. Today’s agreement is another deliberate step in building a BP that can compete and succeed through the energy transition.”
1H Discoveries at Lowest Point in 21st Century – Global discoveries of conventional resource volumes (CRV) dwindled in the first half (1H) of this year, according to Rystad Energy. The company estimates that CRV discoveries stood at 4.9 billion barrels of oil equivalent (boe) in 1H 2020, which is the weakest performing first half of the 21st century, Rystad highlights. Resource volumes were said to be 42 percent lower and discovery numbers were down 31 percent compared to the same period in 2019, Rystad revealed. Rystad estimates that the average monthly discovered volumes so far this year stand at 810 million boe, which marks a 34 percent drop from the same period last year, according to the company. The monthly average was pulled down primarily by June, which only saw three small onshore discoveries, Rystad noted. January and May were said to be the most successful months in 1H due to “significant” discoveries such as Jebel Ali in the United Arab Emirates, Maka Central in Suriname, Uaru in Guyana and 75 Let Pobedy in Russia. Russia, South America and the Middle East account for about 73 percent of the total discovered resources so far in 2020, according to Rystad, which revealed that the period saw a total of 49 conventional oil and gas discoveries. Of these, 27 were said to have been announced during the global lockdown and travel restriction period. “Last year we saw the highest volumes of discovered resources since the last downturn,” Rystad Energy’s upstream analyst Taiyab Zain Shariff said in a company statement sent to Rigzone. “Based on the large number of high-impact exploration wells planned for this year, 2020 was meant to follow the same path. But then Covid-19 struck and the oil market crashed in 1Q20, resulting in delays and cancellations as operators cut budgets,” Shariff added in the statement.
Analysts Expect Refinery Closures— The global refining industry is entering a consolidation phase as slowing oil demand growth is set to coincide with large-scale projects that will start coming online next year, according to Goldman Sachs Group Inc. The demand hit from the coronavirus is yet to cause any delays in a number of mega-refining projects, most of which are in China and the Middle East, that will start operations from 2021 to 2024, the bank said in a note. This will cause global utilization rates to be 3% lower over this period than in 2019. “We expect competition to intensify leading to below consensus — and mid-cycle — refining margins over 2021-22 and potential refinery closures in developed markets,” analysts including Nikhil Bhandari said in the note. Global oil demand will return to pre-virus levels by 2022, they said. Emerging markets will provide the bulk of oil consumption growth in the first half of this decade and the new mega-refineries will be located close to where the demand is, according to Goldman. This means refinery closures will be more likely in developed nations. Among oil products, gasoline will lead the recovery in fuel demand, the lender said. The outlook for distillates is more challenging as jet fuel’s recovery will be slower and diesel consumption will be hit by the uptake of electric vehicles in the medium term. In addition, the new mega-refineries are distillates heavy. Gasoline and diesel consumption will return to 2019 levels by next year, while jet fuel is unlikely to get there until at least 2023, the analysts said. Liquefied petroleum gas and naphtha will be key long-term growth drivers on the back of growing petrochemical consumption, while overall oil demand won’t peak before 2030, they said.
Petrol sold to Nigeria from Europe ‘dirtier’ than black market ‘bush’ fuel – Black market fuel made from stolen oil in rudimentary “bush” refineries hidden deep in the creeks and swamps of the Niger delta is less polluting than the highly toxic diesel and petrol that Europe exports to Nigeria, new laboratory analysis has found. Shell, Exxon, Chevron and other major oil companies extract and export up to 2m barrels a day of high quality, low sulphur “Bonny Light” crude from the Niger delta. But very little of this oil is refined in the country because its four state-owned refineries are dysfunctional or have closed. Instead, international dealers export to Nigeria around 900,000 tonnes a year of low-grade, “dirty” fuel, made in Dutch, Belgian and other European refineries, and hundreds of small-scale artisanal refineries produce large quantities of illegal fuel from oil stolen from the network of oil pipelines that criss-cross the Niger delta. The net result, says international resource watchdog group Stakeholder Democracy Network (SDN) in a new report, is that Nigeria has some of the worst air pollution in the world, with dense clouds of choking soot hanging over gridlocked cities leading to a rise in serious health conditions as well as damaged vehicles. The extreme toxicity of the “official” fuel exported from Europe surprised researchers who took samples of diesel sold in government-licensed filling stations in Port Harcourt and Lagos. They found that on average the fuel exceeded EU pollution limits by as much as 204 times, and by 43 times the level for gasoline. Laboratory analysis also showed that the black market fuel was highly polluting but of a higher quality than the imported diesel and gasoline. The average “unofficial” diesel tested exceeded the level of EU sulphur standards 152 times, and 40 times the level for gasoline.
Nigeria Bucks LNG Export Trend— Nigeria plans to keep its liquefied natural gas supply at current levels despite prices near record lows, the opposite of what exporters from the U.S. to Australia are doing. State-owned Nigeria LNG Ltd. plans to continue utilization levels and may even boost exports in August and September depending on demand, according to a person with knowledge of the strategy. The country exported over 1.8 million tons last month, higher than last year’s monthly average of 1.7 million, according to ship-tracking data compiled by Bloomberg. A spokesperson for Nigeria LNG didn’t immediately comment on the plans. Most of the world’s suppliers curbed deliveries in June as measures to contain coronavirus slashed gas consumption, with global exports down 6.3% from the previous year. Only a handful of exporting countries, including Qatar and Algeria, have been able to boost output. Some of Nigeria’s buyers have exercised clauses in their long-term contracts, that allow them to take fewer shipments than originally agreed. The firm has been able to sell that excess supply into the spot market, but usually at a discount. More than half of Nigeria’s exports in May ended up in Asia, compared with less than a third last year, according to ship-tracking data. Production costs at Nigeria’s Bonny Island facility are so low that it can still turn a profit amid weak spot prices, said the person who asked not to be identified because the plans are private. The facility has among the lowest costs in the world, according to data from Sanford C. Bernstein & Co.
Three-kilometre oil spill reported on Sharjah beach – An oil slick was reported along the coast of Khor Fakkan in Sharjah on Monday. The spill washed up over a three-kilometre stretch between Luluyah and Zubara public beaches. The environmental hazard was reported to Khor Fakkan Municipality, which assembled a team including members from Beeah, an environmental management company, to clean up the beach. “We received a report about the oil spill and a team of 50 people will be working on cleaning up both Luluyah and Zubara beaches,” said Fawzia Al Qadi, director of the municipality. Ms Al Qadi said that the clean-up process began Monday and is expected to be completed by Tuesday. “We don’t know the reason behind it, but there is a high possibility that the oil was dumped by tankers into the water,” she said. Ms Al Qadi said it was is not the first time oil has washed up onshore on the east coast with the most recent incident occurring five months ago. A resident of the area, who shared a video of the spill online said he noticed trails of black sludge enveloping the sand at Luluyah beach.“I noticed the oil on the sand at 7am and the smell in the area was bad similar to the fuel smell,” said Khaled Al Rayssi, who runs a Khor Fakkan news Instagram account. “The colour of the water near the shore was dark and the oil was coming out of the water and settling on the sand,” he said. Oil spills on the east coast happen several times a year. Last March, campers shared videos of Al Aqah coastline in Fujairah covered with black oil that washed ashore. The oil covered around 1.5 kilometres of the beach and reached some of the hotels next to the public beach camping site.
Nearly 48,000 liters of oil spill into Iloilo City waters after power barge explosion – – Around 48,000 liters of oil spilled into waters off Iloilo City on Friday after an explosion at a power barge, local officials said. Authorities estimated an area of 1,200 square meters was affected by the spillage. The Coast Guard also pegged that about 40,000 liters were spilled. “Current efforts involve scooping and skimming of spilt oil in order to contain the spill led by the [Philippine Coast Guard],” said the city’s city’s emergency operation center. The explosion took place at 2:24 p.m. at AC Energy’s Power Barge 102 in Lapuz district’s Barrio Obrero, officials reported. The fire was declared out by 3 p.m. The barge’s estimated capacity is 200,000 liters. AC Energy said it is investigating the cause of the explosion. It added that the oil spill was initially blocked by a structure surrounding the barge but high waves caused it to spill out. “We will do the needed cleanup once we are confident that we have done a good job containing the oil in the area,” the company said in a statement. “We target completion of containment tonight, to be followed by skimming activities tomorrow.”
Asian gasoil margins improve as lockdowns ease, but challenges remain – (Reuters) – Asian refiners’ profits from gasoil have more than trebled from a record low seen in early May as demand recovers after sweeping lockdowns imposed to curb the COVID-19 pandemic, although refiners ramping up production after maintenance could cap gains, analysts said. Refining profits for gasoil with 10 parts per million of sulphur in Singapore were at $6.29 a barrel over Dubai crude on Monday, up from a record low of $1.77 on May 5, Refinitiv data showed. Gasoil spot premiums are hovering near their strongest levels this year, while traders believe that overall refining margins in the region will be supported as the worst is behind for the industrial fuel. “Resumption in industrial activities and an improvement in road freight and transport needs will support a recovery in the third quarter gasoil demand in major economies,” said Sri Paravaikkarasu, director for Asia oil at consultancy FGE. FGE expects gasoil demand in the second half of the year to rise by 600,000 barrels per day (bpd) from the first half, but still be 490,000 bpd lower compared with the same period a year ago. “The region’s gasoil surplus should trend flat q-o-q at around 900,000 bpd in the third quarter and the second half (of 2020) should average at 840,000 bpd, down by 300,000 bpd compared to the first half of the year,”
Russia Benefiting from Oil Market Turmoil – Demand for Russian Urals grade oil is so strong that is has been trading at a pretty steep premium to Brent Crude this month. Southfront references this report from Argus research. This means that the Russian Urals crude is trading at a premium to the European benchmark Brent. The premium is $1.55 per barrel in North-Western Europe and $2.55 – in the Mediterranean. Argus names competition as the reason of Urals reaching such a high price. After the United States imposed sanctions against Venezuelan oil, American refineries began to willingly buy Russian heavy oil, very similar to the one exported by the Venezuelan PDVSA. In addition, demand for Russian oil in Asia is growing.Traditionally, Urals trades at a discount to Brent because of a lack of a unified benchmark price for it. The July Shanghai Crude Oil futures contract closed at ¥299 (or $42.30) per barrel this week, putting it at a ~$1.70 premium to Brent Crude.Russian Urals is far closer to the Medium Sour oil the Shanghai contract represents than the Light Sweet Brent. At the same time the Saudi Arabian plan to flood the market with oil to gain market share has failed entirely.Despite record oil exports in April as Saudi Arabia flooded the market with oil, the value of the Kingdom’s crude exports plunged by US$12 billion from April 2019 levels as the lowest oil prices in years hit revenues.In April, the value of Saudi Arabia’s oil exports plummeted by 65.4%, or US$12 billion (45.3 billion Saudi riyals), severely affecting the value of the total exports of the world’s top oil exporter, data from Saudi Arabia’s General Authority of Statistics showed on Thursday.China was Saudi Arabia’s main trading partner for merchandise trade in April 2020, with Saudi exports to China valued at US$1.9 billion (7.16 billion riyals).The Saudis flooded the market with oil after the collapse of the previous OPEC+ deal in early March, exporting a record 10.237 million barrels per day (bpd) in April 2020, up from 7.391 million bpd in March, according to data from the Joint Organisations Data Initiative (JODI).They shipped out 50% more oil and revenues plunged by 65%. They practically gave the stuff away in April. They had to. With the Riyal tied to the dollar they had to undercut Russian oil which trades in freely-floated rubles.In March and April the ruble spiked to a high of RUB81.66 per dollar and has steadily fallen since then. Today it is still trading around 5% weaker against the U.S. dollar than it was pre-crisis. That then becomes an even bigger source of profit given that now Urals grade is trading at a premium to Brent Crude while U.S. exports continue to lag behind. And the Saudis are now still price takers rather than price makers since they immediately had to go back and adhere to production cuts in like with the rest of OPEC+’s agreement.
Russia Urals Exports Set to Fall Sharply –Russia’s exports of its flagship Urals crude oil grade are set to plunge next month, underscoring the nation’s commitment to helping OPEC and allied producers to avert a global glut. Exports of the grade from its three main western ports — Primorsk and Ust-Luga in the Baltic Sea and Novorossiysk in the Black Sea — will fall 40% month-on-month to about 785,000 barrels a day in July, according to loading plans seen by Bloomberg. The country only began shipping from Ust-Luga in 2012 and flows from the three facilities have never been lower on a combined basis since then.Russia is working with Saudi Arabia and other producing countries to eliminate a surplus. Its output cuts have driven up premiums that Urals command to the highest in years, and tightened the wider physical oil market, albeit at the cost of selling smaller volumes. Financial derivatives in the Urals market rallied after the news. Swaps contracts for July were trading at premiums of between $1.80 and $1.95 to Dated Brent, brokers said. That compares with a discount of about $4.50 at the depths of oil’s rout in early April. The reduced exports had already been foreshadowed by a partial loading program. An export schedule for the first 10 days of July showed flows for the period dropping to 880,000 barrels a day. Primorsk will lead the drop, handling 1.3m tons, or about 307,000 barrels a day, next month. That’s less than a third of what it was shipping a year ago. Ust-Luga will ship 284,000 barrels a day, while flows from Novorossiysk will decline to below 200,000 barrels a day.
Oil steady as rise in virus cases offsets better data – Oil prices steadied on Monday, supported by improving economic data but held in check by sharp spikes in new coronavirus infections around the world that have forced some countries to impose partial lockdowns. Brent crude fell 4 cents, or 0.1%, to $40.98 a barrel and U.S. crude was up 7 cents, or 0.2%, at $38.56. Crude prices found some support as profits at China’s industrial firms rose for the first time in six months in May, suggesting the country’s economic recovery is gaining traction. The recovery of economic sentiment in the euro zone also intensified in June after a modest pick-up in May, with improvements across all sectors and a much more buoyant sense of future business, European Commission data showed. However, fears of a second wave of the pandemic took the shine off the improving economic data. The United States, India and Brazil are experiencing a resurgence in infections, leading authorities to partially reinstate lockdowns in what experts say could be a recurring pattern in the coming months and into 2021. The death toll from COVID-19 surpassed half a million people on Sunday, according to a Reuters tally. “Looking ahead, anxiety is likely to remain heightened as the epic fight against the coronavirus pandemic continues. This spells bad news for risk assets (such as oil) which will inevitably remain under pressure,” said Stephen Brennock of broker PVM. Oil prices were also under pressure from poor refining margins and high inventories, analysts said. Still, Brent is set to end June with a third consecutive monthly gain after major global producers extended an unprecedented 9.7 million barrels per day supply cut agreement into July, while oil demand improved after countries across the globe eased lockdown measures.
Oil Prices Rebound Amid Positive Economic Data — Oil rebounded from a weekly loss as better-than-estimated economic data countered fears that Covid-19’s resurgence will crimp fuel demand. Futures in New York and London closed higher after declining for two out of the last three weeks. Prices followed equities higher as U.S. pending home sales posted a record gain, signaling that America’s economic recovery is underway. Yet the outlook remains uncertain. “The economic data continues to improve,” Still, the overall market picture is bearish. Crude stockpiles in the U.S. are at record highs, worldwide consumption remains a long way off pre-virus levels and many refiners are struggling with low margins. In another indication that supplies are plentiful, WTI and Brent crude for prompt delivery are trading at discounts to later dated contacts in a market structure known as contango. New clusters of coronavirus infections across the U.S. South and Southwest have states including Texas reversing or slowing reopening plans. Domestic fuel consumption dropped 2.3% Saturday from the same day the week prior. “We have a demand problem,” “I wouldn’t be shocked to see us retest the low $30s.” While American gasoline demand has gradually improved, diesel inventories have expanded for 11 out of the last 12 weeks, suggesting that industrial activity has a long road to recovery. “The product inventory problem may be the most bearish factor out there,” said O’Grady. “If you look at the demand for distillate, it’s terrible, and distillate is what drives the economy,” Prices:
- West Texas Intermediate for August delivery rose $1.21 to $39.70 a barrel in New York
- Brent for the same month, which expires Tuesday, settled 69 cents higher at $41.71. The more active September contract settled at $41.85
Oil Markets On Edge As Second Wave Hits – Oil continues to trade around $40 per barrel. There are offsetting forces at play – continued economic rebound creates upward pressure but fears of accelerating Covid-19 transmission magnifies downside risk. In the oil market, the possibility of new Libyan oil is offset by tighter compliance from OPEC+. Shell said it would write down $22 billion, as it revised down its assumed oil price in the years to come. The writedown included an $8-$9 billion impairment in its integrated gas unit, $4-$6 billion in upstream, and $3-$7 billion in its refining portfolio. The move will increase deb gearing by 3 percent. Chesapeake Energy is arguably the highest-profile shale driller to succumb to bankruptcy to date. The company will continue to operate six to eight rigs for the next two years, about half of the number of rigs from the first quarter. The bankruptcy will wipe out $7 billion in debt. Chesapeake reported a first quarter loss of $8.3 billion earlier this year. China, India, the European Union and the United States will join other countries in a “green recovery” summit hosted by the IEA. The agency is pushing the world to undertake green stimulus. “Even if governments do not take climate change as a key priority, they should still implement our sustainable recovery plan just to create jobs and to give economic growth. Renovating buildings, for instance, is a job machine,” the IEA’s Fatih Birol said. A Reuters survey of 45 analysts finds an average Brent price of $40 per barrel for 2020, with price gains towards the end of 2020 and into 2021. ExxonMobil is preparing to let go between5% and 10% of its US-based employees subject to performance reviewed, anonymous sources told BNN Bloomberg. The number of active U.S. frack crews, which bottomed out at 45 last month, has since jumped to 78 last week, according to industry consultant Primary Vision Inc. and Bloomberg. Libyan oil could resume. Negotiations between the U.S. and regional governments in the Middle East could pave the way for oil exports. BP agreed to sell off its entire petrochemical unit to Ineos for $5 billion. The oil market downturn has accelerated BP’s plans to transition into a low-carbon energy company. The oil company’s shares jumped on the news.
Oil slips slightly on rising coronavirus cases, returning Libyan supplies – (Reuters) – Oil prices slipped on Tuesday as investors worried that rising COVID-19 cases would hurt demand while supply could rise with a potential resurgence of Libyan oil production, which has slowed to a trickle since the start of the year. The more-active September contract for Brent LCOc2 settled down 58 cents at $41.27 a barrel. The August contract LCOc1, which expires on Tuesday, fell 56 cents, or 1.2%, to $41.15. The contract has gained 16.5% this month so far, and 81% on the quarter. U.S. crude CLc1 was down 43 cents, or 1%, at $39.27 a barrel. U.S. crude has risen 12.4% in the past month, up about 95% in the quarter, reflecting its recovery from late March. The contract pared losses in post-settlement trade after data from trade group the API showed a larger-than-expected draw in U.S. crude stockpiles. Fuel demand has recovered from the worst weeks of the outbreak, but cases have been rising in southern and southwestern U.S. states. Northeastern states like New York and New Jersey doubled the number of states from which travelers face quarantine restrictions. “Sustaining the independent show of gasoline strength will be challenged by coronavirus headlines where news has seen a definite negative shift in recent weeks,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report. Investors will seek signs of demand recovery in weekly inventory data due on Tuesday from the American Petroleum Institute industry group and from the U.S. government on Wednesday. [EIA/S] Libya is trying to resume exports, which have been almost entirely blocked since January due to civil war. The state’s oil company hopes talks will end a blockade by eastern-based forces.
Oil posts hefty quarterly climb, but coronavirus cases, oversupply worries feed year-to-date loss – Oil futures ended lower on Tuesday as persistent concerns about the rising number of cases of COVID-19 offset upbeat data suggesting both China’s manufacturing and service sectors are recovering. Despite a significant rebound for oil prices in the second quarter, U.S. oil prices still ended the first half of the year with losses of close to 36%. “The second quarter will not soon be forgotten by energy traders given that WTI crude oil futures plunged into negative territory for the first time in history, and decidedly so, in the month of April,” said Tyler Richey, co-editor at Sevens Report Research. That was “due to logistics issues in the physical supply chain, most notably a critical lack of available storage for freshly lifted crude barrels in the U.S.” On April 20, WTI oil futures fell 306% to settle at negative $37.63. “Since then, oil and refined product markets have staged an equally historic rebound with prices poised to end the second quarter nearly 100% higher than where they ended Q1 due to a swift recovery in consumer demand as well as sharp output cuts by global oil producers,” Richey told MarketWatch. On Tuesday, West Texas Intermediate crude for August fell 43 cents, or 1.1%, to settle at $39.27 a barrel on the New York Mercantile Exchange. So far this year, prices based on the front-month contracts, were nearly 36% lower, according to Dow Jones Market Data. For the quarter, however, prices rose nearly 92%.
WTI Jumps After Biggest Crude Inventory Draw Since 2019 — A rollercoaster day saw WTI ramped to $40, fail and fade back to close red on the day (but ends more than 90% higher for the quarter, but still down nearly 36% year to date). “As we move into the second half of the year, the energy rebound is showing signs of stalling, however, as traders assess the threat of the recent resurgence in COVID-19 cases and the looming possibility of more economic shutdowns in the back half of the year,” said Tyler Richey, co-editor at Sevens Report Research. . API
- Crude -8.156mm (-2.7mm exp)
- Cushing +164k
- Gasoline -2.459mm (-2.7mm exp)
- Distillates +2.638 (+900k exp)
After two weekly surprise builds in a row, US crude stocks saw a major draw of over 8mm barrels – the most since 2019… WTI hovered around $39.30 ahead of the API print and spiked higher on the surprisingly large draw… As Richey told MarketWatch, “The second quarter will not soon be forgotten by energy traders given that WTI crude oil futures plunged into negative territory for the first time in history, and decidedly so, in the month of April.” That was “due to logistics issues in the physical supply chain, most notably a critical lack of available storage for freshly lifted crude barrels in the U.S.”
Oil prices just had their best quarter in 30 years – what’s next? -Oil prices registered their best quarterly performance in 30 years during the three months through to the end of June, staging a dramatic comeback after falling to record lows in April. Brent crude futures skyrocketed more than 80% in the second quarter. It was the international benchmark’s best quarterly performance since the third quarter of 1990, when it registered gains of 142% during the first Gulf War. U.S. West Texas Intermediate futures surged 91% in the three months through to end of June, also reflecting the best quarterly performance for U.S. crude since the third quarter of 1990 when it soared 131%. However, despite notching extraordinary gains in recent weeks, both Brent and WTI futures are still down over 34% since the start of the year. The IEA’s Executive Director Fatih Birol has reportedly said he believes 2020 may well come to be regarded as the worst year in the history of global oil markets, with April likely to be the worst month the industry has ever seen. “I think obviously what we saw with the Covid crisis was unprecedented and, in oil markets, it was coupled with the dislocation of the supply agreement between Russia and the OPEC countries at the same time,” Martin Fraenkel, president of S&P Global Platts, told CNBC’s “Squawk Box Europe” on Tuesday. Those two “massive” events impacting oil prices was “a once-in-a-generation coincidence, so I don’t really expect that again,” Fraenkel said. Nonetheless, he warned oil price volatility was likely to continue over the coming months, citing “really high” dislocations throughout the global energy sector. On April 20, benchmark U.S. crude prices tumbled into negative territory for the first time on record, falling as low as negative $40 a barrel at the height of coronavirus lockdown measures. It meant producers were effectively having to pay traders to take oil off their hands. Brent futures did not enter negative territory in late April, but the benchmark did slump to its lowest level since 1999 in a week some Wall Street veterans have since described as: “Scary,” “unbelievable,” and “very visceral.”
WTI Fades Despite Biggest Crude Draw Since 2019 – Oil prices extended gains overnight after API reported a surprisingly large crude inventory draw (the biggest in 2020) and bounced back above $40 this morning after the vaccine headlines. “The market’s main concern is demand and how Covid-19 affects it,” said Louise Dickson, an analyst at consultant Rystad Energy AS.This follows Dr. Fauci’s warning yesterday that the U.S. is “going in the wrong direction” in its effort to contain the outbreak; but for now, all eyes on whether the official inventory data confirms API’s surprise. DOE
- Crude -7.195mm (-2.7mm exp, BBG -500k exp) – biggest draw since Dec 2019
- Cushing -263k – 8 week streak of draws
- Gasoline +1.19mm (-2.7mm exp)
- Distillates -593k (+900k exp)
After three straight weeks of builds, DOE confirmed API’s report of the biggest crude draw since 2019… After a rebound (from storm Cristobal’s shut-ins) in the prior week, US crude production was flat week-over-week…Graphs Source: BloombergWTI was trading just below $40.00 ahead of the DOE print and after briefly popping, began to fade back to pre-API levels…
Oil up more than 2% on U.S. jobs data but virus fears cap gains – (Reuters) – Oil futures gained more than 2% on Thursday, supported by a drop in U.S. unemployment and a drawdown in crude inventories, but a resurgence in U.S. coronavirus infections fanned concerns that economic activity will weaken in coming weeks. New COVID-19 cases in the United States rose by nearly 50,000 on Wednesday, the biggest one-day increase since the start of the pandemic. Numerous states are advising citizens to restrict movements and closing businesses and restaurants again, which is expected to hamper job growth. Brent crude LCOc1 futures settled at $43.14 a barrel, rising $1.11, or 2.6%. U.S. West Texas Intermediate (WTI) crude CLc1 futures settled at $40.65 a barrel, up 83 cents, or 2.1%. ADVERTISEMENT “At this time, the economic data seems to be outpacing the COVID-19 infections and it seems the growth is happening despite this uptick in cases,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. U.S. non-farm payrolls increased by 4.8 million in June, beating expectations, even as permanent job losses rose. Traders said the data could lessen the desire in Washington for more federal support for the economy. “The jobs report was good, but the flip side of that was that it was so good that it might inhibit a stimulus program,” said Bob Yawger, director of energy futures at Mizuho. U.S. energy firms cut the number of operating oil and natural gas rigs to a record low for a ninth straight week, according to Baker Hughes Co.
Oil climbs for a second session, settles at highest since March – Oil futures rose for a second session on Thursday to mark their highest finish since March, buoyed by better-than-expected U.S. job growth in June, after data a day earlier showed the biggest weekly domestic crude supply decline since 2019. The U.S. added 4.8 million jobs in June and the unemployment rate fell for the second straight month to 11.1%, according to government data released Thursday. “A strong U.S. nonfarm payroll report suggests the U.S. economic rebound continues and that crude demand should follow suit,” said Edward Moya, senior market analyst at Oanda, in a market update. On Thursday, West Texas Intermediate crude for August rose 83 cents, or 2.1%, to settle at $40.65 a barrel on the New York Mercantile Exchange, after gaining 1.4% on Wednesday. For the holiday-shortened week, oil saw a weekly gain of 5%, based on the most-active contract close last Friday, according to FactSet data. Read:Is the stock market closed Friday? For July 4th, here’s everything investors need to know about trading hours and closures Global benchmark Brent oil for September BRNU20, -0.04% picked up $1.11, or 2.6%, at $43.14 a barrel on ICE Futures Europe, which will hold an abbreviated trading session Friday. Brent oil traded 5.2% higher week to date.
Oil jumps 2% on U.S. economic data, posts second weekly gain in three – Oil prices rose on Thursday after data showed a fall in U.S. unemployment and a sharp drop in crude stockpiles, although concerns that a spike in U.S. coronavirus infections could stall a recovery in fuel demand kept gains in check. U.S. non-farm payrolls increased by 4.8 million in June, the Labor Department reported on Thursday, beating expectations. Brent crude futures gained $1.11, or 2.64%, to settle at $43.14 per barrel, after rising 1.8% in the previous session. West Texas Intermediate crude futures gained 83 cents, or 2.08%, to settle at $40.65 per barrel, adding to a 1.4% rise on Wednesday. U.S. crude inventories fell 7.2 million barrels from a record high last week, far more than analysts had expected, U.S. Energy Information Administration data showed, as refiners ramped up production and imports eased. “Oil prices have remained rangebound as OPEC has done its job on the supply side, and the key uncertainty now remains on demand recovery,” Harry Tchilinguirian, head of commodity research at BNP Paribas, said. “Crude exceeded expectations of a draw but gasoline stocks rose, which means the recovery has at least paused for a week.” New COVID-19 cases in the United States rose by nearly 50,000 on Wednesday, according to a Reuters tally, in the biggest one-day spike since the start of the pandemic. California rolled back efforts to reopen its economy, banning indoor restaurant dining in much of the state, closing bars and beefing up enforcement of social distancing and other measures. Gasoline stockpiles were higher, confounding expectations of a fall. Analysts highlighted worries about the spike in cases in heavily populated U.S. sun belt states, which are among the country’s biggest consumers of gasoline. Attention will be on U.S. driving activity over the upcoming July 4 holiday weekend and how quickly U.S. producers revive shut-in production, analysts said.
Oil demand to return to pre-pandemic levels by 2022, Goldman says, but unlikely to peak this decade – Analysts at Goldman Sachs expect global oil demand to return to pre-pandemic levels by 2022, citing a pick-up in commuting, a shift to private transportation and higher infrastructure spending. In a research note published Thursday, analysts at the U.S. investment bank estimated global oil demand would decline by 8% in 2020, rebound by 6% in 2021 and “fully recover” to pre-coronavirus levels by 2022. Gasoline was thought to stage the fastest demand recovery among oil products as a result of a pick-up in broader commuting activity, a shift from public to private transportation for commuting, and a higher use of cars to substitute air travel for domestic tourism – particularly in the U.S., Europe and China. Diesel demand was forecast to recover to 2019 levels by 2021, boosted by government-led spending on infrastructure projects. However, Goldman Sachs warned jet fuel demand had been the “biggest loser” from the coronavirus crisis, with consumer confidence on flying set to stay low in the absence of a vaccine and consumer behavior potentially set to change over the long term. Consequently, the U.S. bank does not expect jet fuel demand to return to pre-Covid-19 levels at least before 2023.
Saudi Crude Exports Appear to Be Down 8 Percent— Saudi Arabia seems to have made good on its promise to cut oil production by a record amount in June. Observed Saudi crude exports for this month fell to 5.7 million barrels a day through June 29, the lowest since Bloomberg began tracking the flows at the start of 2017. That compares with 6.2 million a day in May. It’s a reduction equivalent to more than seven full supertankers over the course of the month. As the coronavirus ravages the global economy and saps energy demand, the Saudis are leading a push among major oil producers to cut supplies. State company Saudi Aramco agreed to cap output at 8.5 million barrels a day from May-July as part of an OPEC+ agreement to boost prices. The kingdom then went a step further, pledging to pump 1 million barrels daily less than that in June. While changes in exports and overall production aren’t perfectly correlated, those curbs are showing up in the kingdom’s shipments to the world’s biggest economies. Flows to China, usually the largest purchaser, are down by about 45% on a monthly basis in June to 1.1 million barrels a day. A recent flood of Saudi oil to the U.S. has dropped sharply. Flows in June have shriveled to 224,000 barrels a day, compared with almost 1.3 million in April, a three-year high. Only three supertankers and a smaller vessel were observed carrying Saudi crude to the U.S. in June, though more may emerge as some cargoes update their final destinations. Tankers hauling a combined 17 million barrels of oil from the kingdom this month haven’t yet indicated their ultimate port of call. It takes a ship roughly six weeks to sail from Saudi Arabia to the U.S. and about three weeks to China. Any vessel leaving for America now would arrive in the first half of August. The volume of oil from Saudi Arabia has swung wildly in the past few months, in part due to the lingering effects of the kingdom’s price war with Russia earlier in the year. Aramco slashed its official selling prices for oil in April and May, before raising them for this month, after the Organization of Petroleum Exporting Countries and its partners agreed to limit output.
Saudi Aramco’s Dividend Math Doesn’t Add Up – It’s the mother of all payouts. The $75 billion that Saudi Aramco doles out in dividends every year dwarfs what any other listed company gives to shareholders. It’s roughly equivalent to the payouts from Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp., BP Plc, Total SA, PetroChina Co., Eni SpA, Petroleo Brasiliero SA and China Petroleum & Chemical Corp. or Sinopec – put together. That makes Chief Executive Officer Amin Nasser’s promise to continue that level of returns for the next five years an extraordinary vote of confidence in an oil market awash with uncertainties. Saudi Aramco will be prepared to borrow money to ensure that it meets its commitment this year despite oil prices heading into negative territory, he said this month. Running up debts to keep the dividend on track is standard practice for energy companies amid the carnage of 2020’s oil market – except for those, like Shell, which plan to cut payouts altogether. You only want to fund dividends out of borrowings, though, if you’re certain it’ll be a strictly temporary measure. The risk for Aramco is that upholding such a long-term promise to shareholders will bend its entire business out of shape, just when it needs to be especially nimble as crude demand slows and goes into reverse. The core of Aramco’s profitability is its astonishingly low production costs, with operating expenses amounting to not much more than $8 a barrel of oil and equivalent products last year. It’s remarkable how quickly the spending adds up, though. Royalties paid to the Saudi state alone added another $10 a barrel or so, while corporate income tax came to around $19 a barrel and dividends swallowed a further $15. Once all those tolls were paid, Aramco didn’t have a lot of spare change left out of $60-a-barrel oil, let alone the stuff in the $40-a-barrel range it’s selling at the moment. A firm dividend policy is an unusually inflexible cost. Unlike the royalties and income taxes levied as a percentage of Aramco’s revenues and profits, payouts don’t automatically shrink if the price of crude declines. If anything, the burden per barrel rises further when prices and output fall. Perhaps in recognition of this, the Saudi state has from the start agreed to forgo its portion of any payouts to the extent that receiving them would get in the way of Umm-and-Abu investors getting their share . That may help maintain a theoretical $75 billion-a-year payout but it makes a nonsense of the idea that all shareholders are equal, not to mention the principle that a dividend policy is some sort of a commitment to future earnings. It’s not clear, either, why a company with this get-out clause would want to take on debt to meet its promised payments, although Aramco’s borrowing costs are essentially identical to those of the Saudi state.
Libya Says US Backed Talks Could End Oil Blockade– Tribes in eastern Libya backed the resumption of oil production from their region, shortly after the state energy company said negotiations between the U.S. and regional governments could lead to a restart of exports from the war-battered OPEC member. The tribes, which helped shutdown most energy facilities in the east in January, will back rebel commander Khalifa Haftar’s Libyan National Army in negotiations with the United Nations over the distribution of oil revenue, Ibrahim Bouhreba al-Baraassi, a member of one of the groups, told Bloomberg on Monday. The announcement came after the state-run National Oil Corp. said it was in talks with Libya’s UN-recognized government in Tripoli, the U.S. and some Middle Eastern powers. The NOC and Washington have called on supporters of Haftar, who’s backed in Libya’s civil war by Egypt, Russia and the United Arab Emirates, to end their blockade of the nation’s oil ports and fields. “We are hopeful that those regional countries will lift the blockade and allow us to resume our work for the benefit of all the Libyan people,” the NOC said, without identifying the nations. An agreement should “protect the oil facilities and make sure they are never used as a military target or a political bargaining chip again.” Libya’s exports have plummeted to less than 100,000 barrels a day from 1.1 million because of the shut downs. The NOC has said that neglect and damage from the conflict, which began in 2011 after the ouster of former leader Moammar Qaddafi, means it will cost hundreds of millions of dollars to restore output fully. Haftar, who’s based in the east, launched a western offensive and was close to taking the capital, Tripoli, earlier this year, which would have effectively given him control of the country. Turkey intervened on behalf of the Tripoli government of Fayez al-Sarraj and pushed Haftar’s forces back toward Sirte. The two sides are poised to square off in the central city close to Libya’s “oil crescent” — where some of its largest fields and export terminals lie. The NOC said last week that Russian and other mercenaries had entered the western oil field of Sharara, the nation’s biggest, to prevent production from restarting. “Many oil-producing countries are benefiting from the ongoing oil blockade and are taking advantage of the absence of the Libyan oil from global markets,” Mustafa Sanalla, the NOC’s chairman, said on Monday following a meeting with the European Union’s ambassador to the country.
Yemen Rebels Send Repair Team to Stricken Tanker — Yemen’s Houthi rebels say they’ve sent a maintenance team to repair an aging oil tanker laden with more than 1 million barrels that the United Nations and environmental groups see as a threat to marine life in the Red Sea. The decaying vessel Safer has been moored off Houthi-controlled Hodiedah province since 1988, and the crude, worth some $40 million at today’s prices, was on board when civil war broke out in Yemen in 2015. The repair team may fail to prevent the Safer from leaking oil, however, because the Saudi Arabian-led coalition fighting the Houthis has blocked access to necessary equipment, Mohammed Ali Al-Houthi, a member of the Houthi ruling political council, said in a statement. The Houthis, who are backed by Iran, can’t sell the oil; international buyers are wary of dealing with them, and the Saudi-led coalition controls waters near the vessel. Yemen’s UN-recognized government has said the rebels would be to blame for any leaks from the ship because it’s moored in a Houthi-held area. The Houthis have refused to accept any responsibility. The conflict in Yemen has caused severe hunger, an outbreak of deadly cholera, and — in the words of the UN — “the worst man-made humanitarian crisis of our time.” An oil spill from the Safer could destroy the livelihoods of 126,000 fishermen, according to a statement posted last month on the Yemen-based website Holm Akhdar. Some 850,000 tons of fish in the Red Sea, the Bab El Mandab waterway, and the Gulf of Aden could perish, it said.
Iran Calls For Trump’s Arrest Over ‘Brutal Murder’ Of Revolutionary Guard General – A top Iranian prosecutor has called for the arrest of President Trump and dozens of other Americans for their involvement in the “brutal murder” of former IRGC General Qassem Soleimani in Baghdad. According to the AP, “the charges underscore the heightened tensions between Iran and the US since President Trump unilaterally withdrew America from Tehran’s nuclear deal with world powers,” though President Trump “faces no danger of arrest.” Iran’s state-run IRNA news agency reported Monday that Tehran prosecutor Ali Alqasimehr has accused Trump and more than 30 other Americans (whom Iran believes were involved in planning and executing the Jan. 3 strike that killed Gen. Qassem Soleimani in Baghdad) of “murder and terrorism charges”. The identities of those other than Trump weren’t disclosed, however. After filing the charges, Alqasimehr on behalf of Iran reportedly requested an Interpol “red notice” be issued calling for the arrest of Trump and the others, which represents the highest level arrest request issued by Interpol. Local authorities end up making the arrests on behalf of the country that request it. The notices cannot force countries to arrest or extradite suspects, though they can put subjects at risk of arrest or detention if they travel abroad. Interpol hasn’t commented on the requests, suggesting that it isn’t taking Iran’s petition seriously. Interpol’s guidelines for red notices explicitly states that the agency can’t get involved in political issues. Soleimani, the head of the IRGC’s Quds Force (an international arm tasked with coordinating terror attacks in accordance with Iran’s interests around the world) was killed during the opening days of 2020, kicking off what has been a year of non-stop news and activity as both Iran and the US were soon hammered by the coronavirus as it spread internationally from Wuhan, China.
U.S. files suit to seize gasoline in four Iran tankers headed to Venezuela (Reuters) – U.S. prosecutors late on Wednesday filed a lawsuit to seize the gasoline aboard four tankers that Iran is shipping to Venezuela, the latest attempt by the Trump administration to increase economic pressure on the two U.S. foes.The government of Venezuelan socialist President Nicolas Maduro has flaunted the tankers, which departed last month, to show it remains unbowed by U.S. pressure. The United States, has been pressing for Maduro’s ouster with a campaign of diplomatic and punitive measures, including sanctions on state oil company PDVSA [PDVSA.UL].Gasoline shortages in Venezuela, like Iran a member of OPEC, have grown acute due to the U.S. sanctions, and the country has undergone an economic collapse. Still, Maduro has held on, and the failure to unseat him has been source of frustration for U.S. President Donald Trump, some American officials have said privately.In the civil-forfeiture complaint, the federal prosecutors aim to stop delivery of Iranian gasoline aboard the Liberia-flagged Bella and the Bering, and the Pandi and the Luna, according to the lawsuit, first reported in the Wall Street Journal. It also seeks to deter future deliveries.The complaint, filed in the U.S. District Court for the District of Columbia, also aims to stop the flow of revenues from petroleum sales to Iran, which Washington has sanctioned over its nuclear program, ballistic missiles, and influence across the Middle East. Tehran says its nuclear program is for peaceful purposes.Zia Faruqui and two other assistant U.S. attorneys allege in the lawsuit that Iranian businessman Mahmoud Madanipour, affiliated with Iran’s Islamic Revolutionary Guard Corps, or IRGC, helped arrange the shipments by changing documents about the tankers to evade U.S. sanctions. The lawsuit says that since September 2018, the Revolutionary Guards’ elite Quds Force has moved oil through a sanctioned shipping network involving dozens of ship managers, vessels and facilitators.
Israel Is On Brink Of War With Iran & Hezbollah- Top Israeli Officials The former Israeli Defense Minister, Avigdor Lieberman, said that Iran and Lebanese Hezbollah are pushing Israel to the brink. In an interview with Israel’s national Hebrew-language daily newspaper Maariv on Friday, the former Israeli Defense Minister had expressed his concern about Iran possessing enriched uranium, which he said is eight times the permitted amount according to the nuclear agreement, and that a month ago Iran successfully launched a spy satellite into orbit. Lieberman further charged that Hezbollah is now building a precision missile factory in honor of the late Iranian Quds Force commander, General Qassem Soleimani, which is pushing Israel to the brink, claiming that Israeli Prime Minister Benjamin Netanyahu has no plans to confront them. Lieberman said Iran is continuing its ongoing policies in its regular military programs and continues to fund Hezbollah, Hamas, and the Islamic Jihad, although Iran faces enormous economic difficulties of its own. However, despite Lieberman’s claims, Israel has in fact intensified their attacks against the Iranian forces and allies inside Syria this year, with multiple attacks taking place each month.
Iran threatens retaliation after what it calls possible cyber attack on nuclear site (Reuters) – Iran will retaliate against any country that carries out cyber attacks on its nuclear sites, the head of civilian defence said, after a fire at its Natanz plant which some Iranian officials said may have been caused by cyber sabotage. The Natanz uranium-enrichment site, much of which is underground, is one of several Iranian facilities monitored by inspectors of the International Atomic Energy Agency (IAEA), the U.N. nuclear watchdog. Iran’s top security body said on Friday the cause of the “incident” at the nuclear site had been determined, but “due to security considerations” it would be announced at a convenient time. Iran’s Atomic Energy Organisation initially reported an “incident” had occurred early on Thursday at Natanz, located in the desert in the central province of Isfahan. It later published a photo of a one-storey brick building with its roof and walls partly burned. A door hanging off its hinges suggested there had been an explosion inside the building. “Responding to cyber attacks is part of the country’s defence might. If it is proven that our country has been targeted by a cyber attack, we will respond,” civil defence chief Gholamreza Jalali told state TV late on Thursday. An article issued on Thursday by state news agency IRNA addressed what it called the possibility of sabotage by enemies such as Israel and the United States, although it stopped short of accusing either directly. “So far Iran has tried to prevent intensifying crises and the formation of unpredictable conditions and situations,” IRNA said. “But the crossing of red lines of the Islamic Republic of Iran by hostile countries, especially the Zionist regime and the U.S., means that strategy … should be revised.”
ISIS was state-sponsored by US allies, says former government intelligence analyst – A stunning new study authored by a former US government intelligence analyst and staff member for official investigations into the 9/11 attacks, concludes that the Islamic State (ISIS) received significant state-sponsorship up to 2016. The study is corroborated by revelations from two former senior British intelligence officials in exclusive interviews with INSURGE. The new evidence raises urgent questions about the material context of ISIS’ extraordinarily rapid growth, and its ability to inspire incidents such as the truck attack in New York. Contrary to conventional wisdom, the peer-reviewed paper published in the Routledge journal Studies in Conflict and Terrorism in July, confirms not only that several regional states deliberately empowered al-Qaeda and ISIS foreign fighters for their geopolitical ends, but that many of these states are ostensibly US allies in the ‘war on terror’: including Turkey, Pakistan and Saudi Arabia. How States Exploit Jihadist Foreign Fighters Jihadist foreign fighters are frequently described as non-state actors whose prominence challenges the traditional… www.tandfonline.com Study author Professor Daniel Byman of Georgetown University’s Security Studies Programme was previously a Middle East analyst for the US intelligence community, and headed up the Center for Middle East Studies at the RAND Corporation – a major US government defence contractor.
China Oil Titans Plan Joint Crude Buying to Add Market Clout – China’s state-owned oil refining giants are in discussions to form a purchasing group to buy crude together, increasing their bargaining power and avoiding bidding wars. Senior executives from China Petroleum & Chemical Corp., PetroChina Co., Cnooc Ltd. and Sinochem Group Co. are in advanced talks to iron out details of the plan, said people familiar with the initiative, who asked not to be identified as discussions are private and ongoing. The proposal has won the support of the Chinese central government and relevant industry watchdogs, the people said. For a start, the group is set to collectively issue bids for certain Russian and African grades in the spot market, they said. While it’s unclear how the cooperation will evolve, the group represents refiners that import more than 5 million barrels of oil a day. That’s nearly a fifth of OPEC’s total output, which would make it the world’s largest crude buyer in theory. The initiative — first mooted in 2019 — gained traction this year as the coronavirus spurred historic output cuts by OPEC and its allies to regain control of the market. China’s crude oil imports almost tripled in past decade The original epicenter of the pandemic, China was the first major economy to reopen and its consumption of transportation and industrial fuels is now almost back to pre-virus levels. The v-shaped recovery has in recent months prompted the country’s state-owned and independent refiners to snap up Russian and Brazilian crude in the spot market, pushing up prices. The state-owned refiners may jointly bid for Russian ESPO cargoes as early as next month in a trial run, the people said. The group might expand to allow participation from non-state owned processors — including so-called teapots in Shandong province — in the future, they said. Sinopec’s media office declined to comment on the matter when contacted on Friday, while PetroChina couldn’t immediately respond. Emails sent to CNOOC and Sinochem went unanswered, while nobody immediately responded to fax messages to China’s National Energy Administration and the National Development and Reform Commission.
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