Oil Market News, OPEC+, sanctions and price shocks

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The big oil companies - from the UK-based BP and Shell to international giants such as ExxonMobil and Norway’s Equinor - have been announcing astonishing profit figures.

They are all benefitting from the surging price of oil and gas following the invasion of Ukraine.

While they rake in the profits, people around the world are struggling to pay their energy bills and fill up their cars - leading to calls for higher taxes on these companies.

So how are they making so much money, and should the government step in to stop them?

Diesel prices at the pump have fallen to their lowest in over a year. That’s good news for consumers, but the decline in prices for the fuel suggests a gloomy outlook when it comes to the U.S. economy.

“Diesel fuel is ubiquitous in our economy,” says Brian Milne, product manager, editor, and analyst at DTN. It’s a “critical component in industrial production and…supply-chain dynamics.”

Weaker demand, however, has led to lower diesel prices. U.S. government data show diesel demand in the first 10 weeks of this year down 12.6% from the comparable period in 2022, says Milne, with the steep drop in demand due to slowing growth in parts of the economy, especially for heavy industry and construction. This slowdown is further pressured by higher interest rates and the recent bank failures increasing expectations for a recession, he says.

On March 22, U.S. retail diesel prices averaged $4.279 a gallon, down from $5.04 a year ago, according to AAA.

Diesel has been dropping “far longer than gasoline…so while the price of gasoline has been occasionally rising, diesel, for the entirety of 2023 has been in decline” — a trend that could continue “until diesel eventually falls below $4 per gallon in the weeks ahead,” says Patrick De Haan, head of petroleum analysis at GasBuddy.


Oil prices rally, lifting U.S. prices to a gain for the month​

Story by Myra P. Saefong • 2h ago

Oil futures finished sharply higher on Friday, prompting U.S. prices to turn higher for the month of April, buoyed by expectations for tighter supplies.

Speculation over a potential rescue for troubled First Republic Bank also supported prices, as banking issues have weighed on the economic outlook and in turn, the prospects for energy demand.


Early this morning, Saudi Arabia announced it will extend its voluntary, unilateral oil production cut by one month, at least through August (the output cut can and likely will be extended further), keeping a ceiling on supply even as the market is expected to tighten further.

Moments later, its OPEC+ ally Russia announced it will "voluntarily" extend a reduction of its oil exports in August by 500K bbl/day to ensure the oil market remains balanced, Deputy Prime Minister Alexander Novak says in statement.

The Saudi output reduction of 1 million barrels a day that started this month — which comes in addition to existing curbs agreed by OPEC+ — will continue into August and could be extended further, according to a statement published by state-run Saudi Press Agency.

LONDON, July 3 (Reuters) – Oil and gas companies have intensified the hunt for new deposits in a long-term bet on demand, as they reinvest some of the record profits from the fossil fuel price surge driven by the Ukraine war, according to data and industry executives.

The exploration revival – on the part of European majors in particular – reflects a renewed commitment to oil and gas after Shell and BP slowed down plans to shift away from their legacy business and invest in renewables as part of the energy transition.

July 10 (Reuters) - Oil major BP (BP.L) agreed to pay a civil penalty of $10.75 million to cover allegations company traders manipulated natural gas markets in 2008, which is less than BP has already paid in the case, U.S. energy regulators said in a filing.

  • Big Oil companies have urged governments to focus on reducing demand for energy rather than limiting supply, suggesting it is more beneficial for the long-term goal of a net-zero world.
  • OPEC officials disagree with the notion of reducing production and investments in oil and gas, and emphasize reducing emissions instead.
  • While some perceive this stance as Big Oil's attempt to preserve its focus on oil and gas during a period of record profits, others see it as a pragmatic response to the realities of energy demand and security
  • Traders question the sudden surge in U.S. oil production reported by the EIA.
  • The EIA's revised reporting method has raised production estimates, challenging industry expectations.
  • U.S. oil exports are on the rise, impacting global markets and reducing reliance on Saudi-Russian supply.
Saudi Arabia on Tuesday extended its 1-million-barrels-per-day voluntary crude oil production cut until the end of the year, according to the state-owned Saudi Press Agency.

The reduction will put Saudi crude output near 9 million barrels per day over October, November and December and will be reviewed on a monthly basis.

Riyadh first applied the 1 million-barrels-per-day reduction in July and has since extended it on a monthly basis. The cut adds to 1.66 million barrels per day of other voluntary crude output declines that some members of the Organization of the Petroleum Exporting Countries have put in place until the end of 2024.

MOSCOW, Sept 20 (Reuters) – Russian oil producers supplied their first cargoes of CPC Blend crude to the United Arab Emirates (UAE) in August and September, four traders told Reuters, opening up a new export route as Moscow looks to find new customers and skirt Western sanctions.

Moscow has found new markets for its oil despite sanctions imposed by G7 countries since the start of the war in Ukraine, which Moscow calls a special military operation.


Power of Siberia 2: Moving beyond a pipe dream?​

Cut off from Europe after its invasion of Ukraine, Russia is “pivoting to Asia”, and especially China, to find alternative markets for natural gas. Moscow wants a larger share of China’s future energy mix, raising concerns about reduced exports for Australia and other countries.

In particular, Moscow wants to build a second pipeline to pump natural gas to China. Russia’s Power of Siberia 1 (PS1) pipeline exports gas from eastern Siberia to China. The Power of Siberia 2 (PS2) pipeline – assuming it is eventually built – will export gas from the Yamal peninsula fields in western Siberia, cutting across eastern Mongolia to carry 50 billion cubic metres (bcm) of gas annually to northern China. Currently, the country is the world's biggest energy consumer and a growing consumer of gas.


Saudi Arabia and Russia, the world's top two oil exporters, on Wednesday discussed the situation on the oil market and prices amid the escalating conflict between Israel and Hamas, President Vladimir Putin's top oil official said.
Russian Deputy Prime Minister Alexander Novak greeted Saudi Arabia's Minister for Energy Prince Abdulaziz bin Salman in Moscow on Wednesday ahead of the "Russian energy week" conference in Moscow, which Putin will address.

Novak said he and Prince Abdulaziz discussed the oil market and cooperation within the OPEC+ group of oil producers.

"Of course, (cooperation within OPEC+) was (considered) at our internal meeting, one of the most important topics that we discussed today," Novak said, according to Interfax news agency.

"We are in constant contact and used this opportunity in our meeting to discuss the market situation," Novak said.

It was not immediately clear what, if any, concrete conclusions were reached. Novak said earlier that the oil price would be discussed.
Saudi Arabia and Russia have agreed to continue with voluntary oil supply cuts of a combined 1.3 million barrels of oil per day, or more than 1% of global demand, to the end of the year.

Saudi Arabia said on Tuesday it was working with regional and international partners to prevent the escalation of the situation in Gaza and neighbouring areas, and reaffirmed that it supports efforts to stabilise oil markets.

Israel produces very little crude oil, but markets are worried that the conflict could escalate and disrupt Middle East supplies, worsening an expected deficit for the rest of the year.


Crude Oil Prices Surge As Investors Price In Possibility Of Wider Conflict In West Asia | CNBC TV18​

Oct 16, 2023


Crude oil prices surge as investors price in the possibility of wider conflict in West Asia. Manisha Gupta tells us about crude on Commodity Corner today.

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