Oil Market News, OPEC+, sanctions and price shocks

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Iraq, oil firms trade blame over shut Turkey pipeline​

  • Iraq-Turkey pipeline shut since March 2023
  • Baghdad: around 225,000 bpd being produced without its oversight
  • APIKUR says terms of current contracts must be maintained
March 25 (Reuters) - Foreign oil firms operating in Iraq's Kurdistan region are partly to blame for the delay in resuming crude exports after failing to submit contracts for revision, Iraq's oil ministry said.

The Iraq-Turkey oil pipeline (ITP) which once handled about 0.5% of global oil supply has been halted, stuck in legal and financial limbo, since March 2023.

The flows were halted after the Paris-based International Chamber of Commerce in a longstanding arbitration case ruled Ankara had violated provisions of a 1973 treaty by facilitating such exports without the consent of the Iraqi federal government.

Iraq's oil ministry in a statement published late on Sunday noted that foreign companies, alongside the Iraqi Kurdish authorities, have still not submitted contracts for revision to the ministry.

The government is seeking to revise such deals after a court ruled ones signed with the Kurdistan Regional Government (KRG) were invalid, it said in response to a statement on Saturday by the Association of the Petroleum Industry of Kurdistan (APIKUR).




Oil little changed as markets weigh Russian supply woes​

LONDON, March 26 (Reuters) - Oil was little changed on Tuesday after rising in the previous session as investors took a more mixed view toward the loss of Russian refinery capacity after recent Ukrainian attacks while a slightly weaker U.S. dollar offered some support.

Brent crude futures for May slipped 12 cents to $86.63 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 8 cents to $81.87 a barrel at 1005 GMT.

Brent rose 1.5% in Monday's session while WTI gained 1.6% higher after Russia's government ordered companies to cut output in the second quarter to meet a 9 million barrels per day (bpd)target to comply with pledges to the OPEC+ consumer group.

Russia, a top three global oil producer and one of the largest exporters of oil products, is also contending with recent attacks on its oil refineries by Ukraine. Goldman Sachs analysts estimate the attacks have knocked about 900,000 bpd of capacity offline, possibly for weeks and in some cases permanently.



Exclusive: Russia struggles to collect oil payments as China, UAE, Turkey raise bank scrutiny​

MOSCOW, March 27 (Reuters) - Russian oil firms face delays of up to several months to be paid for crude and fuel as banks in China, Turkey and the United Arab Emirates (UAE) become more wary of U.S. secondary sanctions, eight sources familiar with the matter said.

Payment delays reduce revenue to the Kremlin and make them erratic, allowing Washington to achieve its dual policy sanction goals - to disrupt money going to the Kremlin to punish it for the war in Ukraine while not interrupting global energy flows.

Several banks in China, the UAE and Turkey have boosted their sanctions compliance requirements in recent weeks, resulting in delays or even the rejection of money transfers to Moscow, according to the eight banking and trading sources.

Banks, cautious of the U.S. secondary sanctions, started to ask their clients to provide written guarantees that no person or entity from the U.S. SDN (Special Designated Nationals) list is involved in a deal or is a beneficiary of a payment.



Houthis threaten Saudi Arabia's oil installations for 'supporting US aggression'​

Yemen's Houthi rebels have threatened to target Saudi Arabia's oil installations should the country allow a US-led coalition to use its airspace to counter the group's attacks, a Houthi spokesperson said in an interview with al-Masirah TV on March 25.

"We have sent a message to Saudi Arabia that it will be a target if it allows American fighter jets to use its territory or airspace in their aggression on Yemen," Mohammed Ali al-Houthi, a member of the group's Supreme Political Council, said in the interview.

Saudi Arabia's energy ministry and state-run oil producer Aramco were not immediately available for comment.

The Houthis have stepped up attacks along the Bab al-Mandeb, a critical chokepoint through which 10% of the world's oil is traded since the onset of the Israel-Hamas conflict in October 2023.

The Yemeni group has gone after oil tankers and containers that have any Israeli ownership or have been bound for one of the country's ports, prompting several global ship liners to redirect via the longer Cape of Good Hope route.



Focus: Argentina builds case for exporting natgas to Brazil through Bolivia​

HOUSTON/BUENOS AIRES, April 1 (Reuters) - Energy companies from Argentina and Brazil have begun talks on reversing the southerly flow of a Bolivian natural gas pipeline network that connects the three countries as a regional gas deficit could force Brazil to pay up for alternative supplies of the fuel.

A preliminary proposal on the pipeline shift has failed to gain traction with Bolivia, according to executives and sources, leaving Brazil increasingly exposed to volatile prices of liquefied natural gas (LNG).

Brazil has made clear in recent months that gas from Argentina, which has the world's second largest shale gas reserves, will be needed to balance supplies. Exports from Bolivia, which once was a prominent producer in the region, have declined rapidly and may not be available after 2029, say experts.

The fastest and cheapest option to address the regional shortfall may be to export gas from Argentina's Vaca Muerta shale formation by reversing a network of Bolivian pipelines that has brought gas south.



New west-east route keeps Europe hooked on Russian gas​

  • Spain entry hub for LNG to head east across Europe
  • Portovaya terminal sent first Russian cargo to Spain this year
  • EU sanctions do not apply to Russian gas
  • European Commission set 2027 deadline to end Russian gas imports
April 3 (Reuters) - Western European governments have sought to reduce their energy dependence on Russia since the outbreak of the Ukraine war, but when it comes to gas, they have increasingly substituted the country's pipeline supplies with its liquefied natural gas (LNG).

A Reuters analysis of data found more than a tenth of the Russian gas formerly shipped by pipeline to the European Union has been replaced by LNG delivered into EU ports.

The rise is partly the result of discounts, industry and trading sources say.

Private Russian producer Novatek last year sold cut-rate cargoes into the EU rejected by buyers in other parts of the world, while state-owned Gazprom increased exports from its new Portovaya LNG project, offseting its falling pipeline deliveries westward.

Home to the EU's largest fleet of import terminals, Spain, which did not previously import piped Russian gas, has become the top re-exporter of seaborne Russian supply.



Exclusive: US sanctions hamper Russian efforts to repair refineries​

  • Lukoil refinery struggles to repair gasoline unit
  • U.S. firm UOP says not helping Lukoil
  • All Russian refineries use Western technology, software
  • Ukrainian drones damage dozens of Russian plants
MOSCOW/LONDON, April 4 (Reuters) - When engineers at Russian oil firm Lukoil (LKOH.MM), opens new tab discovered a turbine had broken at their largest refinery on January 4, they quickly realised the problem was far from trivial.

There was only one company that knew how to repair the gasoline-producing unit at the NORSI refinery, located on the Volga River, some 430 km (270 miles) east of Moscow. The problem was that the company is American, according to five sources familiar with the incident.

The firm, petroleum engineering multinational UOP, had withdrawn from Russia after the country invaded Ukraine in February 2022.

"They (the engineers) rushed around to find spare parts and they couldn't find anything," said a source close to Lukoil, who asked not to be named because he is not allowed to speak to the media. "Then the whole unit just stopped."

Four other sources said the unit - a catalytic cracker used to convert heavier hydrocarbons into gasoline - has been out of production since January and it was not clear when it could be repaired due to a lack of expertise inside Russia. The KK-1 unit is one of only two catalytic crackers at the plant.



Why the death of North Sea oil is a disaster for Britain​

Far out in the North Sea a deserted but massive oil platform awaits its fate. Brent Charlie is the last remainder of the Brent field – a resource so big it once provided a third of the UK’s daily oil needs.

Discovered in the 1970s, the Brent field at one point produced 184 million barrels of oil a year, earning billions for Shell, its owner, plus £20bn in tax revenues for the Exchequer. It was so big it needed four massive platforms to extract its riches – Brent Charlie, Alpha, Bravo and Delta.

Today Alpha, Bravo and Delta have gone, cut from their supports and taken to the scrapyards.

Later this year Brent Charlie will also have its legs cut from under it and be lifted on to Pioneering Spirit – a giant ship specially designed to rip apart decaying oil and gas installations.

Pioneering Spirit and the growing fleet of similar oil rig-slaughtering vessels are set for some busy years. In the waters around the UK, hundreds more oil and gas installations are falling silent. Fifty years after the North Sea bonanza began, the final decline is upon us.

As well as hauling the retired rigs to shore, nearly 8,000 wells that were drilled deep into the seabed must also be plugged.

The decline of the North Sea has implications not just for energy policy and tax income, but public finances more broadly.

We face a huge bill – potentially up to £60bn – to clean up the North Sea.



OPEC has 'hands on the steering wheel' of oil market​

Apr 9, 2024 #opec #oil #yahoofinance

Crude oil futures (CL=F, BZ=F) momentarily pause their price rally after hitting multi-month highs, remaining elevated around various geopolitical tensions including the ongoing conflict between Israeli and Hamas forces in the Middle East.

CIBC Private Wealth US Senior Energy Trader Rebecca Babin weighs in on the oil inventory pressures associated with OPEC+'s production cuts and the Russia-Ukraine War, looking ahead to the range where oil and US gas prices could eventually settle into.

"Right now what they [OPEC+] have is a beautiful position of controlling the market. They've got their hands on the steering wheel here. They don't want to lose that," Babin tells Yahoo Finance. "You let it go too far, you get SPR (Strategic Petroleum Reserve). So, let's bring back some barrels. I think this puts a damper on this rally to $100 [per barrel] that some people are talking about. And he second big factor I think is demand destruction. You can't just have an explosive rally to the upside and think demand is going to be completely inelastic."


Oil rises as Middle East worries offset US crude stock build​

LONDON, April 10 (Reuters) - Oil prices rose on Wednesday after two days of losses as a deadlock in Gaza ceasefire talks renewed uncertainty about the security of supply from the Middle East and offset a bigger-than-expected build in U.S. crude inventories.

Brent crude futures were up 30 cents, or 0.3%, at $89.72 per barrel at 1010 GMT, while U.S. West Texas Intermediate (WTI) crude futures rose 29 cents, or 0.3%, to $85.52.

"Some of the heat has come out of the rally in crude oil in the early part of this week on hopes of a ceasefire in Gaza and higher U.S. inventories," said Tony Sycamore, a market analyst at IG in Singapore.



Oil seen opening up after Iran's attack on Israel​

LONDON, April 14 (Reuters) - Oil prices, which hit a six-month high on Friday, are expected to rise on Monday after Iran's attack on Israel over the weekend, analysts said, but further gains may depend on how Israel chooses to respond.

Iran launched explosive drones and missiles at Israel late on Saturday in retaliation for a suspected Israeli attack on its consulate in Syria on April 1, a first direct attack on Israeli territory that has stoked fears of a wider regional conflict.

Concern that Iran would respond to the strike on its embassy compound in Damascus supported oil last week and helped send global benchmark Brent crude on Friday to $92.18 a barrel, the highest since October.

Brent settled that day up 71 cents at $90.45, while U.S. West Texas Intermediate crude futures rose 64 cents to $85.66. Trading is closed on Sunday.

"It is only reasonable to expect stronger prices when trading resumes," said Tamas Varga of oil broker PVM. "Having said that, there has been no impact on production so far and Iran has said that 'the matter can be deemed concluded'.



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