Sunday, March 20, 2022

total oil + products supplies at new 95 month low; distillates exports at 20 month high; February global oil surplus is first in 13 months

Commercial crude supply rises but SPR at new 19½ year low, total oil + products supplies at new 95 month low; exports of distillates at a 20 month high after largest drop in domestic demand in 18 months; natural gas supplies 17.4% below normal, natural gas drilling is most in 29 months; global oil surplus at 360,000 barrels per day in February, first surplus in 13 months, even as OPEC production was 668,000 barrels per day short of quota..

oil prices saw their first back-to-back weekly decline​s​ since December as China locked down its financial and industrial hubs to control a new Covid outbreak, and as hedge funds reversed their ​earlier ​bullish oil bets ahead of a Fed interest rate hike...after falling 6.2% to $109.33 a barrel last week in volatile trading that saw $15+ price swings, the contract price for US light sweet crude for April delivery tumbled more than 8% in early trading on Monday to trade as low as $99.76 per barrel amid fresh talks between Russia and Ukraine and new Covid-19 lockdowns in China, which would dent demand, before partly recovering to close $6.23 lower at $103.01 per barrel, following reports that China and India -- the world's largest and third-largest oil importers - were considering circumventing international sanctions to scoop up discounted Russian oil and other commodities....oil prices tumbled more than 6% again on Tuesday​, as hedge funds reversed their net-bullish oil bets to their lowest levels on record, and settled $6.57 lower at $96.44 a barrel after Ukrainian officials signaled ​that ​a ceasefire agreement with Russia could be reached as soon as next week, while OPEC warned​ that​ the Russo-Ukrainian conflict would have a far-reaching effect on global demand growth...April oil then traded lower for the fifth time in six sessions on Wednesday​,​ as traders reacted to progress in Russia-Ukraine peace talks and a surprising increase in US oil inventories, and accelerated its losses in afternoon trading after the Fed raised the federal funds rate 25 basis points and signaled additional ​interest ​rate hikes at each of the six remaining meetings this year, and settled $1.40 lower at $95.04 a barrel...however, oil prices rallied early Thursday as Ukrainian peace talks stalled and the International Energy Agency said that Russia's output was likely to fall by 30% or ​by ​3 million bpd in April​, leading to the 'biggest supply crisis in decades', and then spiked ​up ​$7.94 or 8% to settle at $102.98 barrel on reports suggesting ​that ​any ceasefire agreement between Russia and Ukraine was a long way off, ​& ​as the US dollar hit a 5 week low...the oil price recovery continued into early trading on Friday as traders decided that the impact of escalating fighting in Ukraine on global oil and commodity trade outweighed the demand destruction due to resurgent Covid-19 infections in China, and settled the session $1.72 higher at $104.70 a barrel on expectations that Russian oil production would decline sharply in the coming weeks, impaired by Western sanctions on technology transfers and​ on​ financing options for Russian oil companies already struggling to sell crude oil cargos on the spot market, but still finished 4.2% lower for the five-day ​stretch, after swinging by more than $16 a barrel throughout the week​,​ as intense volatility and geopolitical risks continued to upend markets...

meanwhile,natural gas price​s​ finished higher for the 4th time in five weeks as near record LNG exports offset the bearish impact of rapidly receding winter weather...after falling 5.8% to $4.725 per mmBTU last week as traders refocused on the domestic supply and demand situation and ​as ​weather forecasts turned warmer, the contract price of natural gas for April delivery opened lower on Monday and fell 6.7 cents to $4.658 per mmBTU, as weekend weather forecasts continued to show mild conditions through late March, likely pushing the domestic market comfortably beyond the peak heating season...natural gas prices fell another 9.0 cents to $4.568 per mmBTU on Tuesday, the lowest settlement since February 9th, amid warmer weather patterns and the potential that​ they​ would lead to storage injections over the coming weeks...however, gas prices rose 18.0 cents or 4% on Wednesday on near record LNG exports and ​on ​slightly cooler forecasts than was previously forecast...natural gas prices then jumped over 5% to a near two-week high of $4.990 per mmBTU on Thursday, on forecasts for cooler weather over the next two weeks and a bigger than expected withdrawal from storage due to those near-record LNG exports...but natural gas gave up more than 2% of its price on Friday to settle 12.7 cents lower at $4.863 per mmBTU, on forecasts for less heating demand over the next two weeks than was expected, thus allowing utilities to start injecting gas into storage about a week earlier than usual, even as April gas still finished 2.9% higher on the week..

The EIA's natural gas storage report for the week ending March 11th indicated that the amount of working natural gas held in underground storage in the US fell by 79 billion cubic feet to 1,440 billion cubic feet by the end of the week, which left our gas supplies 344 billion cubic feet, or 19.3% below the 1,784 billion cubic feet that were in storage on March 11th of last year, and 304 billion cubic feet, or 17.4% below the five-year average of 1,744 billion cubic feet of natural gas that have been in storage as of the 11th of March over the most recent five years....the 79 billion cubic foot withdrawal from US natural gas working storage for the cited week was more than the average forecast for a 70 billion cubic foot withdrawal expected by an S&P Global Platts survey of analysts, and it was ​almost qu​intruple the 16 billion cubic feet that were pulled from natural gas storage during the corresponding week of 2021, and was also more than the average withdrawal of 65 billion cubic feet of natural gas that have typically been pulled out natural gas storage during the same week over the past 5 years...

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending March 11th indicated that even after a big increase in our oil exports, we still had surplus oil to add to our stored commercial crude supplies for the fifth time in 16 weeks and for the 15th time in the past forty-two weeks, because of a big increase in oil supplies that could not be accounted for …our imports of crude oil rose by an average of 76,000 barrels per day to an average of 6,395,000 barrels per day, after rising by an average of 552,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 514,000 barrels per day to an average of 2,936,000 barrels per day during the week, which together meant that our effective trade in oil worked out to a net import average of 3,459,000 barrels of per day during the week ending March 11th, 438,000 fewer barrels per day than the net of our imports minus our exports during the prior week…over the same period, production of crude oil from US wells was reportedly unchanged at 11,600,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have totaled an average of 15,038,000 barrels per day during the cited reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,601,000 barrels of crude per day during the week ending March 11th, an average of 224,000 more barrels per day than the amount of oil than our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net of 337,000 barrels of oil per day were being added to the supplies of oil stored in the US….so based on that reported & estimated data, this week’s crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 880,000 barrels per day less than what what was added to storage plus our oil refineries reported they used during the week…to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+880,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, essentially a balance sheet fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been a error or omission of that magnitude in this week’s oil supply & demand figures that we have just transcribed.... moreover, since last week’s EIA fudge factor was at (-746,000) barrels per day, that means there was a 1,626,000 barrel per day difference between this week's balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the week over week supply and demand changes indicated by this week's report are completely worthless....however, since most everyone treats these weekly EIA reports as gospel and since these figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….

This week's 337,000 barrel per day net increase in our overall crude oil inventories came as 621,000 barrels per day were being added to our commercially available stocks of crude oil, while 283,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve, still part of the Biden administration's original plan to release 50 million barrels from the SPR to incentivize US gasoline consumption....including other withdrawals from the Strategic Petroleum Reserve under similar recent programs, a total of 80,636,000 barrels have now been removed from the Strategic Petroleum Reserve over the past 20 months, and as a result the 575,513,000 barrels of oil remaining in our Strategic Petroleum Reserve is now the lowest since June 28th, 2002, or at a new 19 1/2 year low, as repeated tapping of our emergency supplies for non-emergencies has already drained those supplies considerably over the past dozen years...with Biden's recent announcement that a further 30,000,000 million barrels will be pulled out of the SPR in the wake of the Ukraine situation, the US will have roughly 28 1/2 days of oil supply left in the Strategic Petroleum Reserve when the current SPR withdrawal programs are complete...

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,327,000 barrels per day last week, which was 15.7% more than the 5,4871,000 barrel per day average that we were importing over the same four-week period last year….this week’s crude oil production was reported to be unchanged at 11,600,000 barrels per day as the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,200,000 barrels per day, while Alaska’s oil production was unchanged at 441,000 barrels per day....US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 11.5% below that of our pre-pandemic production peak, but 37.6% above the interim low of 8,428,000 barrels per day that US oil production had fallen to during the last week of June of 2016...

US oil refineries were operating at 90.4% of their capacity while using those 15,601,000 barrels of crude per day during the week ending March 11th, up from a  utilization rate of 89.3% the prior week, and in line with the historical utilization rate for early March refinery operations, when the need for seasonal maintenance typically causes rotating shutdowns…the 15,601,000 barrels per day of oil that were refined this week were 16.1% more barrels than the 13,433,000 barrels of crude that were being processed daily in the wake of winter storm Uri during week ending March 12th of 2021, but 1.4% less than the 15,820,000 barrels of crude that were being processed daily during the week ending March 13th, 2020, when US refineries were operating at what was then a lower than normal 86.4% of capacity at the onset of the pandemic...

Even while the amount of oil being refined this week was higher than a week earlier, gasoline output from our refineries was somewhat lower, decreasing by 197,000 barrels per day to 9,380,000 barrels per day during the week ending March 11th, after our gasoline output had increased by 303,000 barrels per day over the prior week.…this week’s gasoline production was still 5.6% more than the 8,877,000 barrels of gasoline that were being produced daily over the same week of last year, but 6.0% less than the gasoline production of 9,974,000 barrels per day during the week ending March 13th, 2020....on the other hand, our refineries’  production of distillate fuels (diesel fuel and heat oil) increased by 305,000 barrels per day to 4,945,000 barrels per day, after our distillates output had decreased by 73,000 barrels per day over the prior week…with this week's increase, our distillates output was 17.0% more than the 4,228,000 barrels of distillates that were being produced daily during the storm impacted week ending March 12th of 2021, and 5.5% more than the 4,686,000 barrels of distillates that were being produced daily during the week ending March 13th, 2020...

With the decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the sixth consecutive week, decreasing by 3,615,000 barrels to 240,991,000 barrels during the week ending March 11th, after our gasoline inventories had decreased by 1,405,000 barrels over the prior week....our gasoline supplies decreased by more this week than last even as the amount of gasoline supplied to US users decreased by 18,000 barrels per day to 8,944,000 barrels per day, because our imports of gasoline fell by 229,000 barrels per day to 531,000 barrels per day, and because our exports of gasoline rose by 113,000 barrels per day to 780,000 barrels per day.but even after 6 straight inventory drawdowns, our gasoline supplies were still 5.6% higher than last March 12th's gasoline inventories of 232,075,000 barrels, when shortages in the wake of Winter Storm Uri had caused back to back record draws after, and still close to the five year average of our gasoline supplies for this time of the year…

Meanwhile, with this week's big increase in our distillates production, our supplies of distillate fuels increased for the time in nine weeks and for the eighth time in twenty-eight weeks, rising by 332,000 barrels to 114,206,000 barrels during the week ending March 11th, after our distillates supplies had decreased by 5,230,000 barrels to a seven and a half year low during the prior week….our distillates supplies managed to increase this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 883,000 barrels per day to 3,704,000 barrels per day, even as our exports of distillates rose by 341,000 barrels per day to a 20 month high of 1,074,000 barrels per day, while our imports of distillates fell by 52,000 barrels per day to 222,000 barrels per day....but after thirty-four inventory decreases over the past forty-nine  weeks, our distillate supplies at the end of the week were still 17.1% below the 137,747,000 barrels of distillates that we had in storage on March 12th of 2021, and about 16% below the five year average of distillates inventories for this time of the year…

Meanwhile, despite the jump in our oil exports, our commercial supplies of crude oil in storage rose for the 12th time in 32 weeks and for the 17th time in the past year, increasing by 4,345,000 barrels over the week, from 411,562,000 barrels on March 4th to 415,907,000 barrels on March 11th, after our commercial crude supplies had decreased by 1,863,000 barrels over the prior week…with this week’s increase, our commercial crude oil inventories were still about 12% below the most recent five-year average of crude oil supplies for this time of year, but were still around 26% above the average of our crude oil stocks as of the second weekend of March over the 5 years at the beginning of the past decade, with the disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels....since our crude oil inventories had jumped to record highs during the Covid lockdowns of spring 2020 and remained elevated for more than a year after that, our commercial crude oil supplies as of this March 11th were still 17.0% less than the 500,799,000 barrels of oil we had in commercial storage on March 12th of 2021, and were also 8.3% less than the 453,737,000 barrels of oil that we had in storage on March 13th of 2020, and also 5.4% less than the 439,483,000 barrels of oil we had in commercial storage on March 15th of 2019…

Finally, with our inventory of crude oil and our supplies of all products made from oil remaining near multi year lows, we are continuing to keep track of the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR....the EIA's data shows that the total of our oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, and thus including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, fell by 5,567,000 barrels this week, 1,724,594,000 barrels on March 4th to 1,719,027,000 barrels on March 11th, after our total supply had decreased by 10,619,000 barrels over the prior week, and are now down by 69,406,000 barrels this year...that left our total supplies of oil & its products now at the lowest since April 4th, 2014, or at a new 95 month low, even after this week's sizable increase in commercial crude inventories..

OPEC Report on Global Oil for February

Tuesday of the past week saw the release of OPEC's March Oil Market Report, which includes details on OPEC & global oil data for February, and hence it gives us a picture of the global oil supply & demand situation after 'OPEC+' agreed to increase their output by 400,000 barrels per day for the seventh consecutive month from the previously agreed to July level, which was in turn part of the fifth production quota policy reset that they've made over the past twenty months, all in response to the pandemic-related slowdown and subsequent irregular recovery....note that with Omicron infections increasing again globally, and the direction and impact of the Ukraine war uncertain, we consider the demand projections made herein, which are essentially unchanged from the prior report, to be bordering on fictional, and hence will not address anything past the February data..

the first table from this monthly report that we'll review is from the page numbered 46 of this month's report (pdf page 56), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings below indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thereby avert any potential disputes that could arise if each member reported their own figures...

As we can see on the bottom line of the above table, OPEC's oil output increased by 440,000 barrels per day to 28,473,000 barrels per day during February, up from their revised January production total which averaged 28,033,000 barrels per day....however, that January output figure was originally reported as 27,981,000 barrels per day, which therefore means that OPEC's January production was revised 52,000 barrels per day higher with this report, and hence OPEC's February production was, in effect, 492,000 barrels per day higher than the previously reported OPEC production figure (for your reference, here is the table of the official January OPEC output figures as reported a month ago, before this month's revision)...

According to the agreement reached between OPEC and the other oil producers at their Ministerial Meeting on July 18th, 2021, the oil producers party to that agreement were to raise their output by a total of 400,000 barrels per day each month through December 2021, which was subsequently renewed to include further 400,000 barrel per day production increases in January and in February 2022, and which would indicate an increase of 255,000 barrels per day from the OPEC members listed above ...but as we can see from the above table, OPEC's increase of 440,000 barrels per day far exceeded that...however, since their January output increase was only 64,000 barrels per day, that means the organization's increase over two months was close to what was expected of them...however, as we'll see in the next table, their February production still remains below the output quota that they were assigned at the joint meeting on January 4th, that set February's specific quotas for OPEC and other aligned producers..

The adjacent table was first presented as a downloadable attachment to the press release following the 24th OPEC and non-OPEC Ministerial Meeting on January 4th, 2022, which set OPEC's production quotas for February... since war torn Libya and US sanctioned producers Iran and Venezuela are exempt from the production cuts imposed by the joint agreement that governs the output of the other OPEC producers, they are not shown here, and OPEC's quota is aggregated under the total listed for the 'OPEC 10', which you can see was at 24,808,000 barrels per day in February...therefore, the 24,140,000 barrels those 10 OPEC members actually produced in February were 668,000 barrels per day short of what they were expected to produce during the month, with Nigeria and Angola accounting for most of this month's shortfall...

 

Recall that the original 2020 oil producer's agreement was to jointly cut oil production by 23%, or by 9.7 million barrels per day, from an October 2018 baseline for just two months early in the pandemic, during May and June of 2020, but that initial 9.7 million bpd production cut agreement was extended to include July 2020 at a meeting between OPEC and other producers on June 6th, 2020....then, in a subsequent meeting in July of that year, OPEC and the other oil producers agreed to ease their deep supply cuts by 2 million barrels per day to 7.7 million barrels per day for August 2020 and subsequent months, which thus became the agreement that governed OPEC's output for the rest of 2020...the OPEC+ agreement for their January 2021 production, which was later extended to include February and March and then April's output, was to further ease their supply cuts by 500,000 barrels per day to a cut of 7.2 million barrels per day from that original 2018 baseline...then, during a difficult meeting on April 1st of last year, OPEC and the other oil producers that are aligned with them agreed to incrementally adjust their oil production higher each month by a pre-set amount for each country over the following three months, thus extending their joint output cut agreement through July....production levels for August and the following months of last year were to be determined by a July 1st OPEC meeting, but that meeting was adjourned on July 2nd due to a dispute between the UAE and the Saudis over the 2018 reference production levels, and a subsequent attempt to restart that meeting on July 5th was called off....so it wasn't until July 18th 2021 that a tentative compromise addressing August's output quotas was worked out, allowing oil producers in aggregate to increase their production by 400,000 barrels per day in August, and again by that amount in each of the following months, and also to boost reference production levels for the UAE, the Saudis, Iraq and Kuwait beginning in April 2022....OPEC and other producers then agreed to increase their production in January 2022 by a further 400,000 barrels per day in a meeting concluded on the 2nd of December, 2021, and reaffirmed their intention to continue that policy with another 400,000 barrel per day increase in February at a meeting concluded January 4, 2022, and then agreed to stick to that 400,000 bpd oil output increase in March, despite pressure from the US to raise output more quickly, at a meeting on February 2nd....finally, at a meeting on March 2nd, OPEC and its oil-producing allies, which included Russia, decided to hold their production increase at that level thru April in an OPEC+ meeting that only lasted 13 minutes, their shortest meeting ever...

Hence OPEC arrived at the production quotas for August 2021 through March of this year by repeatedly readjusting the original 23%, or 9.7 million barrel per day production cut from the October 2018 baseline that they first agreed to for May and June 2020, first to a 7.7 million barrel per day output reduction from the baseline for the remainder of 2020, then to a 7.2 million barrel per day production cut from the baseline for the first four months of this year, which was actually raised to an 8.2 million barrel per day oil output reduction after the Saudis unilaterally committed to cut their own production by a million barrels per day during February, March, and then later during April of last year....under the agreement prior to the current one, OPEC's production cut in April 2021 was set at 4,564,000 barrels per day below the October 2018 baseline, which was lowered to a cut of 3,650,000 barrels per day from the baseline with the prior comprehensive agreement, which thus set the July production quota for the "OPEC 10" at 23,033,000 barrels per day, with war torn Libya and US sanctioned producers Iran and Venezuela exempt from the production cuts imposed by thiat agreement....for OPEC and the other producers to increase their output by 400,000 barrels per day from that July 2021 level, each producer would be allowed to initially increase their production by just over 1% per month since that time...for OPEC alone, a 255,000 barrel per day increase each month since, begining with the July 2021 quota of 23,033,000 barrels per day, is how they arrived at the 24,808,000 barrels per day quota for February.

The next graphic from this month's report that we'll look at shows us both OPEC's and worldwide oil production monthly on the same graph, over the period from March 2020 to February 2022, and it comes from page 47 (pdf page 57) of OPEC's March Oil Market Report....on this graph, the cerulean blue bars represent OPEC's monthly oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale....

Including this month's 440,000 barrel per day increase in OPEC's production from their revised production of a month earlier, OPEC's preliminary estimate indicates that total global liquids production increased by a rounded 960,000 barrels per day to average 99.50 million barrels per day in February, a reported increase which came after January's total global output figure was apparently revised down by 150,000 barrels per day from the 98.69 million barrels per day of global oil output that was estimated for January a month ago, as non-OPEC oil production rose by a rounded 520,000 barrels per day in February after that downward revision, with 340,000 barrels per day of the increase coming from Canada and Norway, both of whom experienced a rebound in production in February after weather related outages

After that increase in February's global output, the 99.50 million barrels of oil per day that were produced globally during the month were 7.49 million barrels per day, or 8.1% more than the revised 92.01 million barrels of oil per day that were being produced globally in February a year ago, which was the second month that OPEC and their allied producers had reduced their output cuts by 500,000 barrels per day from the 7.7 million barrels per day production cut that they applied to the last 5 months of 2020, but the first month that the Saudis had unilaterally decreased their own production by a million barrels per day in response to the pandemic (see the March 2021 OPEC report (online pdf) for the originally reported February 2021 details)...with this month's increase in OPEC's output, their February oil production of 28,473,000 barrels per day amounted to 28.6% of what was produced globally during the month, up from their 28.4% share of the global total in January....OPEC's February 2021 production was reported at 24.848,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year produced 3,625,000 barrels per day, or 14.6% more barrels per day of oil this February than what they produced a year earlier, when they accounted for 26.9% of global output...

After the increases in OPEC's and global oil output that we've seen in this report, the amount of oil being produced globally during the month was a bit more than the expected global demand, as this next table from the OPEC report will show us....

The above table came from page 27 of the March Oil Market Report (pdf page 37), and it shows regional and total oil demand estimates in millions of barrels per day for 2021 in the first column, and then OPEC's estimate of oil demand by region and globally quarterly over 2022 over the rest of the table...on the "Total world" line in the second column, we've circled in blue the figure that's relevant for February, which is their estimate of global oil demand during the first quarter of 2022....OPEC is estimating that during the 1st quarter of this year, all oil consuming regions of the globe have been using an average of 99.14 million barrels of oil per day, which is an upward revision of 10,000 barrels per day from their estimate for 1st quarter demand of a month ago (that revision is circled in green)...but as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were producing 99.50 million barrels million barrels per day during February, which would imply that there was a modest surplus of around 360,000 barrels per day of global oil production in February, when compared to the demand estimated for the month...that would be the first global oil surplus since January 2021...

In addition to figuring February's global oil supply surplus that's evident in this report, the downward revision of 150,000 barrels per day to January's global oil output that's implied in this report, in addition to the 10,000 barrels per day upward revision to first quarter demand noted above, means that the 440,000 barrels per day global oil output shortage we had previously figured for January would now be revised to a shortage of 600,000 barrels per day for that month alone...

Also note that in orange we've also circled an upward revision of 90,000 barrels per day to 2021's demand, which also means that the supply shortfalls that we previously reported for last year would have to be revised....a separate table on page 26 of the March Oil Market Report (pdf page 36) indicates the revisions to 2021 demand included an an upward revision of 330,000 barrels per day to 4th quarter demand, an upward revision of 50,000 barrels per day to 3rd quarter demand, an upward revision of 30,000 barrels per day to 2nd quarter demand. and an upward revision of 10,000 barrels per day to 1st quarter demand...we're not inclined to go back and recompute each month of 2021, but we do have adequate totals for the year such that we can estimate an aggregate revision...

With the release of OPEC's January Oil Market Report two months ago, we had complete and revised data for all of 2021, and found that the world was short 527,910,000 barrels of oil during the year, which worked out to a shortage of 1,446,300 barrels of oil per day....OPEC's February Oil Market Report then revised aggregate global demand for 2021 higher by 10,000 barrels per day, and now this month's report has revised that demand higher by another 90,000 barrels per day....that means our estimate of 2021's oil shortage now needs to be revised 100,000 barrels per day higher, or to 1,546,300 barrels per day...that would thus revise the total shortage total shortage of oil for last year up to 531,560,000 barrels....we're still far from running out, however, because the quantities of oil being produced globally during the pandemic of 2020 still averaged over 1.1 trillion barrels, or over 3 million barrels per day more than anyone wanted....

This Week's Rig Count

The number of drilling rigs running in the US was unchanged during the week ending March 18th, after rising 65 of the prior 77 weeks, while it still remains 16.4% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US remained at 663 rigs this past week, which was still  252 more rigs than the pandemic hit 411 rigs that were in use as of the March 19th report of 2021, but was still 1,266 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global market with oil in an attempt to put US shale out of business….

Despite recent prices near a 14 year high, the number of rigs drilling for oil was down by 3 to 524 oil rigs during this week, after oil rigs had increased by 8 during the prior week, while there are still 208 more oil rigs active now than were running a year ago, even as they still amount to just 32.6% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and are still down 22.8% from the prepandemic oil rig count….on the other hand, the number of drilling rigs targeting natural gas bearing formations increased by 2 rigs to 137 natural gas rigs, which was the most natural gas rigs drilling since October 18th, 2019, and was also up by 45 natural gas rigs from the 92 natural gas rigs that were drilling during the same week a year ago, but was still only 8.5% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008…in addition to rigs targeting oil and gas, Baker Hughes now lists two active "miscellaneous" rigs; one is a rig drilling vertically for a well intended to store CO2 emissions in Mercer county North Dakota, while the other is a directional rig targeting the Marcellus shale at a depth of less than 5000 feet in Schuyler County, New York...a year ago, Baker Hughes only had one rig listed as 'miscellaneous'...

The offshore rig count in the Gulf of Mexico was up by one to twelve rigs this week, with eleven of this week's Gulf rigs drilling for oil in Louisiana waters and another rig drilling for oil in Alaminos Canyon, offshore from Texas....that's one less than the 13 offshore rigs that were active in the Gulf a year ago, when 11 Gulf rigs were drilling for oil offshore from Louisiana and two were deployed for oil in Texas waters…since there is not any drilling off our other coasts at this time, nor was there a year ago, those Gulf of Mexico rig counts are equal to the national offshore totals for both years....

In addition to those rigs offshore, we continue to have 3 water based rigs drilling inland; one is a horizontal rig targeting oil at a depth of between 5000 and 10,000 feet, drilling from inland waters in Plaquemines Parish, Louisiana, near the mouth of the Mississippi, another is a directional rig drilling for oil at a depth of over 15,000 feet in the Galveston Bay area, while the third inland waters rig is a directional rig targeting oil at a depth of between 10,000 and 15,000 feet in St. Mary Parish, Louisiana...during the same week a year ago, there were no inland waters rigs deployed..

The count of active horizontal drilling rigs was down by 1 to 606 horizontal rigs this week, which was still 245 more rigs than the 372 horizontal rigs that were in use in the US on March 19th of last year, but still 55.9% less than the record 1,374 horizontal rigs that were drilling on November 21st of 2014...at the same time, the vertical rig count was down by 2 rig to 21 vertical rigs this week, and those are also down by 4 from the 25 vertical rigs that were operating during the same week a year ago….on the other hand, the directional rig count was up by 3 to 36 directional rigs this week, and those were also up by 22 from the 14 directional rig that were in use on March 19th of 2021….

The details on this week’s changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes…the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of March 18th, the second column shows the change in the number of working rigs between last week’s count (March 11th) and this week’s (March 18th) count, the third column shows last week’s March 11th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 19th of March, 2021...

although it appears there was little new activity this week, there were a number of changes that aren't evident from those tables...in Texas, we find that two rigs were added in Texas Oil District 8, which encompasses the core Permian Delaware, and another rig was added in Texas Oil District 7C, which includes the counties of the southern Permian Midland, but that two rigs were pulled out of Texas Oil District 8A, which includes the counties of the northern part of the Permian Midland...since the Texas Permian thus shows a rig increase while the national Permian basin count was unchanged, we have to figure that the rig that was pulled out of New Mexico had been drilling in the far western Permian Delaware, in the southeast corner of that state...elsewhere in Texas, a rig was pulled out of Texas Oil District 1 and another rig was pulled out of Texas Oil District 3, either of which could have accounted for the Eagle Ford oil rig loss, while a rig was added in Texas Oil District 2; which could also be targeting the Eagle Ford, if both the District 1 and 3 rigs had been removed from that basin...

another oil rig was pulled out of the Williston basin in North Dakota, while an oil rig was added in Oklahoma's Ardmore Woodford, which was offset by a rig removal elsewhere in the state from a basin that Baker Hughes doesn't track...meanwhile a natural gas rig was added in the Haynesville shale in northwest Louisiana, and thus Louisiana's rig count was up by 2 because an oil rig was also added in the state's Gulf waters at the same time...in addition, another natural gas rig was added in the Permian basin, which saw an oil rig shut down at the same time, and hence that basin shows no change in our aggregate table...however, a natural gas rig was pulled out of Pennsylvania's Marcellus at the same time, but the Marcellus shale shows no change because a new "miscellaneous" rig started up in New York targeting that basin at the same time...finally, the natural gas rig we've not yet accounted for was added in a basin that Baker Hughes does not track, while an oil rig was pulled out of another such basin at the same time...

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Utica Energy Alliance reaches membership milestone— The Utica Energy Alliance announced that over 100 businesses and individuals have joined its coalition to support the natural gas and oil industry.UEA membership includes a diverse group of landowners, community leaders, organizations, businesses and elected officials who understand now, not later, is the time to protect and support Ohio’s shale production and promote American energy independence. Since launching in November, the UEA has been on the forefront of energy policy advocacy and grassroots mobilization for the natural gas and oil industry.The UEA has built a diverse coalition of voices that span across industries and regions of Ohio, highlighting the fact our energy sector supports all aspects of our economy and communities.“It’s no surprise that the Utica Energy Alliance has grown so rapidly, speaking with a unified voice for the businesses and communities that rely on the essential energy produced in our state,”said Chris Ventura, Consumer Energy Alliance’s Midwest executive director.“With gas and diesel prices becoming increasingly burdensome to our families and businesses, Ohioans know that the best way to end this energy crisis and lower gas prices is to bring America’s abundant energy resources to the fight.”

The Ohio River Valley Hydrogen Hub: A Boondoggle in the Making – Senator Joe Manchin (D-WV) torpedoed the Build Back Better bill because, he said, it is too costly. But the fleet of hydrogen hub projects he is now promoting for locations around the nation, one of them in the Ohio River Valley, may cost nearly as much, they will drive up utility bills and create few new jobs, and they will miss a large share of the emissions they’re supposed to eliminate. They will also block less costly climate solutions that can create more jobs and actually eliminate climate-warming emissions the hydrogen hubs would only partially abate. According to the White House Council on Environmental Quality, the hydrogen hubs, which have as their centerpiece massive pipeline networks that would funnel carbon captured from power plants and factories to injection points for underground sequestration, would cost between $170 billion and $230 billion just to construct. That figure is dwarfed by the additional investment in carbon capture technology that would have to be made by plant owners whose costs to operate and maintain their retrofitted plants would also rise significantly. A recent Ohio River Valley Institute brief pointed out that retrofitting just the nation’s coal and gas-fired power plants for carbon capture and sequestration (CCS) would add approximately $100 billion per year to Americans’ electric bills, an increase of 25%. The cost of adding CCS to steel mills, cement plants, factories, and other carbon producing facilities could be that much or more. You can move the cost around and even hide it, but you can’t make it go away. The problem with CCS is that, because it’s an add-on process, it necessarily increases the cost of every product and service it touches. That includes the production of “blue hydrogen”— hydrogen derived from methane with partial emission reduction by means of CCS. No business wants to take on unnecessary costs, which is why, despite forty years of federal government funding for research and development, CCS and blue hydrogen are rarely found in commercial settings and, in the case of power generation, they are not found at all. Consequently, even if the federal government invests hundreds of billions of dollars to build the pipeline infrastructure required to transport and sequester captured carbon, the putative customers of that infrastructure—power plants and factories—would still have no incentive to install CCS. In fact, they would put themselves at a competitive disadvantage by doing so.

Report: Oil and gas waste treated at New Castle facility more radioactive when discharged -- Mahoning Matters -A team of investigative journalists have mapped out the 144 disposal or treatment sites in Pennsylvania taking radioactive waste from the oil and gas industry. They found the waste being discharged into state waters far exceeds health guidelines for one specific cancer-causing material, despite federal regulators’ downplaying of the health risks. In some cases — including at a treatment facility along Riverpark Drive in New Castle — the released waste is actually more radioactive than before it was treated, the data shows.“That story takes a really high-level overview and looks at the systemic impacts of this. … The public has never before been able to see with this much clarity on where this radiation is at the state level,” said investigative reporter Jake Conley, who authored the January report for Public Herald, a nonprofit, publicly supported investigative news agency that has been publishing deep dives into environmental health issues in Ohio and Pennsylvania.The group last year published an exposé on the oil and gas waste accepted at landfills in Ohio, likethe Republic Services Carbon Limestone Landfill in Lowellville — which contains “technologically enhanced naturally occurring radioactive material,” or “TENORM.” That includes radium, a radioactive and cancer-causing element that can take 1,600 years to break down. As more is dumped, it settles into waterways, they said. “Radium-226, in particular, is [what] we have heard people refer to as a ‘forever problem,’” Melissa Troutman, Public Herald editor, told Mahoning Matters. “One of the things the regulators have not acknowledged is that cumulative impact over time. If we’re going to be discharging that in the same discharge points for 30 years, what does that buildup look like?”Last summer, Public Herald sought public records from the Pennsylvania Department of Environmental Protection to identify the 144 public and private facilities for the first time ever, and show how much radium they’re discharging.The DEP in 2015 released a study on the radioactive material coming from state oil and gas operations — which the department said in a news release “shows there is little potential for radiation exposure from oil and gas development” — but never named the facilities where the material was treated.According to Public Herald’s map, at sites in or near Mercer and Lawrence counties, the radium content of effluent measured as low as 60 picocuries per liter (pCi/L) and as high as 11,282 pCi/L.The regulatory limit for radium in drinking water is 5 pCi/L. “Some of the numbers … are shockingly high,” Conley said. “That can serve as information for scientists, citizens. It holds the DEP accountable. … They’re allowing this to be propagated across the state.”

Up from the ground comes a bubbling gas: Feds giving PA $400M to plug dangerous orphan wells - (video) “Let’s be quiet for a few seconds,” said Pennsylvania Department of Environmental Protection oil and gas inspector Jonathan Shub, pointing to a large pipe jutting out of the ground amid some trees. Shub and a few visitors had just trudged up a muddy embankment, kicking up leaves and stepping over fallen limbs. Everyone stopped at a level spot, looking up at the backside of an older house in Ohio Township, a few miles north of Pittsburgh. As the group’s chattering faded, a feint gurgling sound could be heard coming from the pipe, a vent for an orphaned gas well far below the leaves and mud. The water filling the vent bubbled like the proverbial witches’ cauldron as the leaking gas below worked its way to the surface. This is just one of about 26,000 orphaned oil and gas wells in Pennsylvania documented by the DEP. Orphaned wells have no owner of record and are no longer producing for commercial or private use. Most of these orphaned wells are old, some dating back to the 1800s and early 1900s, making them susceptible to leaks because they were not plugged anywhere close to current standards. Consequently, the state is responsible for finding and plugging them. Between 1989 and 2021, the DEP has spent about $37 million to plug 3,000 wells, former DEP deputy secretary Scott Perry told the House Environmental Resources and Energy Committee on Feb. 7. But, now some much-needed help is coming from President Joe Biden’s bipartisan infrastructure law. Under the federal legislation, about $4.7 billion has been allocated to plug, remediate and reclaim oil and gas well sites across the country. Pennsylvania could receive up to $411 million over the next 10 years. Citing the U.S. Department of Interior, the Ohio River Valley Institute said in a report that there are more than 130,000 documented unplugged orphaned wells across the nation and, possibly, as many as 800,000 undocumented ones. In late January, Gov. Tom Wolf announced that the state had received $25 million of the $104 million it has been allotted in the first phase. Pennsylvania was among 26 states to apply for funding. Standing on that embankment in early March, Shub said the federal money would be a “game changer” in the effort to plug orphaned wells. Perry, though, put it in starker terms for those House committee members. With the DEP spending about $1 million a year to plug 12 wells annually, “it would take 2,242 years” to plug the 26,000 orphaned wells the department has documented. Some estimates, however, have put the number of orphaned oil and gas wells in the state at between 200,000 and 560,000. “We have thousands of wells that we know about,” Shub said, “and thousands we don’t know about.”

Appalachia on Pace to Lead Lower 48 Natural Gas Output Growth in April, Says EIA -- Led by incremental growth in the Appalachian Basin, major Lower 48 drilling regions are set to raise natural gas output by more than 500,000 MMcf/d in April, according to updated modeling from the Energy Information Administration (EIA). EIA Total natural gas production from seven key U.S. regions will grow by 594 MMcf/d month/month to reach an estimated 92.326 Bcf/d in April, EIA said Monday in the latest iteration of its monthly Drilling Productivity Report (DPR). At 186 MMcf/d, Appalachia is projected to post the largest gain for the period among the seven onshore drilling regions, a group that also includes the Anadarko and Permian basins, as well as the Bakken, Eagle Ford, Haynesville and Niobrara formations. The Haynesville (up 173 MMcf/d), Permian (up 120 MMcf/d) and Eagle Ford (up 94 MMcf/d) are also expected to post month/month increases in natural gas output in the latest DPR. Smaller gains are projected for the Bakken (up 22 MMcf/d) and Niobrara (up 3 MMcf/d). EIA modeled a 4 MMcf/d decline in Anadarko natural gas production from March to April. Oil production out of the seven regions will climb 117,000 b/d from March to April to reach slightly more than 8.7 million b/d, according to the latest DPR. Modeled increases are from the Permian (up 70,000 b/d), the Eagle Ford (up 23,000 b/d), the Bakken (up 16,000 b/d), the Anadarko (up 6,000 b/d) and Appalachia (up 2,000 b/d). Meanwhile, operators across the seven regions drew down their collective backlog of drilled but uncompleted (DUC) wells by 156 from January to February, leaving the combined tally at 4,372, the most up-to-date DPR data show. The Haynesville DUC total held flat month/month at 369, while the Permian (down 86), Eagle Ford (down 19), Niobrara (down 14), Appalachia (down 14), Bakken (down 13) and Anadarko (down 10) regions all saw their respective DUC counts fall from January to February, according to EIA. EIA’s DPR makes use of recent rig data along with drilling productivity estimates and estimated changes in production from existing wells to model changes in production from the seven regions.

West Virginia advances bill punishing banks for cutting oil ties - West Virginia’s legislature has approved a proposal that could restrict the state’s work with financial institutions that have limited their business with coal and oil companies. The measure, Senate Bill 262, is now under consideration by Republican Gov. Jim Justice, after clearing both chambers over the weekend. If enacted, the legislation would allow state Treasurer Riley Moore, also a Republican, to create a list of restricted financial institutions that “have been shown to refuse, terminate or limit commercial activity with coal, oil or natural gas companies without a reasonable business purpose,” his office said in a statementMonday.Moore, who proposed the bill, obtains banking contracts for the state and approves such agreements for state agencies. West Virginia’s approved depositories include dozens of banks, such as JPMorgan Chase and Wells Fargo.

Chickahominy Power cancels plans for natural gas plant in Charles City - A second natural gas plant planned for Charles City County has been canceled, with the developers citing “opposition from outside interests and regulations” that “made it impossible to deliver natural gas to the site.” Specifically, the developers blamed “the renewable energy industry and state legislators that supported them” for the cancellation. Chickahominy Power, LLC posted the announcement that it is terminating its plans to build a 1,600 megawatt natural gas plant southeast of Richmond on Thursday after six years of trying to bring the project to fruition. “We are relocating our development effort to West Virginia and/or Ohio where we have started the process of site selection and air permitting,” the statement reads. In February, an affiliated company known as Chickahominy Pipeline, LLC canceled plans to build a gas pipeline across five counties to carry gas from a Transco line to the planned power plant. That cancellation was spurred by a decision by the regional electric grid manager to terminate Chickahominy Power’s interconnection agreement because it said the company “has demonstrated no diligence or meaningful progress on the Chickahominy Project since entering the queue in October 2016.” Another natural gas plant known as C4GT that different developers planned to build in Charles City County just a mile from the Chickahominy Power site was canceled this July. Both plants would have operated as “merchant generators,” selling electricity into the grid as a business venture, and would not have been providing power directly to Virginia customers. Both also struggled to obtain sufficient financing over the course of their development. Natural gas infrastructure has become increasingly hard to develop in Virginia as the state transitions away from fossil fuels toward renewables. Under the 2020 Virginia Clean Economy Act, the power sector is required to decarbonize by 2050.

FERC failed to adequately review a gas pipeline project's effect on carbon emissions: appeals court Adding to the string of legal defeats for the Federal Energy Regulatory Commission's natural gas infrastructure reviews, a federal appeals court on Friday said the agency failed to adequately consider downstream greenhouse gas (GHG) emissions when it approved a natural gas pipeline project in Massachusetts.The U.S. Court of Appeals for the District of Columbia Circuit also said it was "troubled" that FERC didn't try to get information to estimate how the Tennessee Gas Pipeline project could increase upstream gas drilling. The court didn't weigh in on the merits of the upstream issue because it wasn't raised during FERC's consideration of the upgrade to Tennessee Gas' existing system.The decision came a day after FERC Chairman Richard Glick defended the agency's new policy for reviewing natural gas projects, including the GHG emissions related to them. Glick told the CERAWeek conference the agency's new review policy will help the commission's decisions survive legal scrutiny.FERC in mid-February adopted a new framework for reviewing natural gas infrastructure proposals that includes expanded criteria for deciding whether the facilities are needed and how they could affect people and the environment.The framework also includes an interim policy for reviewing a project's potential GHG emissions.The framework, especially the GHG review criteria, has come undersharp criticism from FERC commissioners James Danly and Mark Christie, some U.S. senators, and the natural gas industry.In part, the new review criteria are in response to a string of court rulings that found flaws in FERC's natural gas infrastructure reviews, Glick said on Thursday during the CERAWeek conference. Those cases include Sabal Trail, Birckhead, Vecinos and Spire Pipeline. Courts have recently found other federal agencies failed to adequately review projects such as the Mountain Valley Pipeline and Dakota Access oil pipeline."The courts send these projects back to the agencies and what that does is it takes years of additional litigation, years of additional review, and it adds hundreds of millions, sometimes billions of dollars of cost," Glick said. FERC is trying to provide a more legally durable approach through the new review framework, according to Glick.

Cash Prices, Natural Gas Futures Falter as Mild Weather Dominates Forecasts -- Natural gas prices stumbled on Monday as weather forecasts continued to show mild conditions through late March, likely pushing the domestic market comfortably beyond the peak heating season. The April Nymex gas futures contract shed 6.7 cents day/day and settled at $4.658. May lost 6.4 cents to $4.702. NGI’s Spot Gas National Avg. dropped 56.0 cents to $4.245 ahead of the anticipated warm-up. Forecast trends over the weekend were bearish, with models advertising comfortable temperatures for much of the Lower 48 starting Tuesday and continuing until late this month, according to NatGasWeather. Temperatures are projected to be “so exceptionally comfortable” between Thursday and March 23 that weak demand will likely “result in the first weekly storage build of the year,” the firm said. “And with a warmer-than-normal pattern favored to continue March 24-31, another build is likely” for the subsequent Energy Information Administration (EIA) storage report. That would mark a stark contrast to the last EIA print, covering the week ended March 4. The agency said utilities withdrew 124 Bcf natural gas from storage during the period. The decrease lowered inventories to 1,519 Bcf, leaving stocks well below the five-year average of 1,809 Bcf. Nationally, gas-weighted heating-degree days could “more than halve” between last week and the middle of this week and “remain lackluster into late March,” EBW Analytics Group senior analyst Eli Rubin said. “The current storage week may feature the last draw of the winter, with softening spot demand opening the door for further downward potential,” he added. The bear case noted, both Rubin and NatGasWeather said demand for exports of U.S. liquefied natural gas (LNG) is elevated and expected to remain so, given the global supply uncertainties imposed by Russia’s invasion of Ukraine. Over nearly three weeks of war, U.S. LNG feed gas volumes have hovered around 13 Bcf and near capacity. The steady calls for U.S. supplies of the super-chilled fuel come as both Western governments and major corporations distance themselves from Russia amid the conflict.

Warm Temperatures Drive April Natural Gas Futures Lower -- Natural gas futures dived lower for a second straight session on Tuesday amid warmer weather patterns and the potential for storage injections over the coming weeks. The April Nymex gas futures contract settled at $4.568/MMBtu, down 9.0 cents day/day. May fell 8.5 cents to $4.617. NGI’s Spot Gas National Avg. shed 17.0 cents to $4.075 on Tuesday after dropping 56.0 cents a day earlier. National Weather Service (NWS) data showed pleasant conditions – and modest heating needs – across much of the Plains, Midwest and East on Tuesday. High temperatures reached the 60s in the northern Plains and the 50s from Minneapolis to Detroit to Boston on Tuesday. Even warmer air was forecast to push East through the week ahead. Warmth spread across most of the rest of the Lower 48. Equally mild conditions were expected into late March, curbing the market’s demand expectations and weighing down natural gas prices. “We’re definitely seeing a reaction to expected weaker shoulder season demand,” StoneX Financial Inc.’s Tom Saal, senior vice president of energy, told NGI. While domestic weather is king in gas markets, other factors leaned in bulls’ favor. Most notably, the Russia-Ukraine war, nearing its three-week mark, continued to inject uncertainty in European gas markets and the potential for price spikes.

U.S. natgas up 4% on rising demand outlook, near-record LNG exports (Reuters) - U.S. natural gas futures gained about 4% to a one-week high on Wednesday with U.S. liquefied natural gas (LNG) exports near record highs and forecasts for slightly cooler weather and higher heating demand next week than previously expected. Overall, however, traders said temperatures were mostly expected to remain at above-normal levels through late March, which should allow utilities to start injecting gas into storage next week - about a week earlier than usual. With Russia's invasion of Ukraine continuing to stoke global energy supply concerns, European gas traded about eight times higher than U.S. futures, keeping demand for U.S. LNG exports at or near record highs. Russia is the world's second-biggest gas producer after the United States. U.S. gas futures remain shielded from global prices because the United States has all the fuel it needs for domestic use, and the country's ability to export more LNG is limited by capacity constraints. The United States is already producing LNG near full capacity. So, no matter how high global gas prices rise, it will not be able to produce much more of the supercooled fuel anytime soon. Before Russia's Feb. 24 Ukraine invasion, the United States worked with other countries to ensure gas supplies, mostly from LNG, would keep flowing to Europe. Russia usually provides around 30% to 40% of Europe's gas, which totaled about 18.0 billion cubic feet per day (bcfd) in 2021. U.S. front-month gas futures rose 18.0 cents, or 3.9%, to settle at $4.748 per million British thermal units (mmBtu), the highest close since March 7. Data provider Refinitiv said average gas output in the U.S. Lower 48 states was on track to rise to 93.0 bcfd in March from 92.5 bcfd in February as more oil and gas wells return to service after freezing earlier in the year. That compares with a monthly record of 96.2 bcfd in December. With milder spring weather coming, Refinitiv projected average U.S. gas demand, including exports, would drop from 109.2 bcfd this week to 94.7 bcfd next week. The forecast for next week was a little higher than Refinitiv's outlook on Tuesday. The amount of gas flowing to U.S. LNG export plants rose to 12.71 bcfd so far in March from 12.43 bcfd in February and a record 12.44 bcfd in January. The United States has the capacity to turn about 12.7 bcfd of gas into LNG.

US natural gas storage declines more than forecast as Henry Hub futures surge - The Henry Hub summer strip rose above $5/MMBtu following US natural gas storage fields withdrawing greater volumes than the market expected. Not registered? Receive daily email alerts, subscriber notes & personalize your experience. Register Now Storage fields withdrew 79 Bcf for the week ended March 11, according to data released by the US Energy Information Administration March 17. Working gas inventories decreased to 1.440 Tcf. US storage volumes now stand 344 Bcf less than the year-ago level of 1.784 Tcf, and 304 Bcf less than the five-year average of 1.744 Tcf. The withdrawal outpaced the 70 Bcf draw expected by a survey of analysts by S&P Global Commodity Insights. Responses to the survey were wide, ranging from a 56 Bcf to 90 Bcf withdrawal. It outpaced the five-year average of 65 Bcf and dwarfed the 16 Bcf pull in the corresponding week last year. The EIA's East and Midwest storage regions led the above-average draw with both declining by 27 Bcf. The South Central region fell by 11 Bcf compared to the five-year average pull of 2 Bcf. The region is now 20% below the five-year average. The NYMEX Henry Hub April contract rose 19 cents to $4.94/MMBtu following the EIA's storage report release. The summer strip, April through October, rose 16 cents to $5.01/MMBtu. The 2022-23 winter strip, November through March, rose 15 cents to $5.12/MMBtu. A forecast by S&P Global calls for a 47 Bcf draw for the week ending March 18. This could be the final net draw of the heating season as a 27 Bcf injection is expected for the week ending March 25. Over the past five years, the final draw of the season typically takes place during this week. US production is forecast to grow by more than 1 Bcf/d during this week to 93.8 Bcf/d. Meanwhile, US demand is slated to decline by 9.5 Bcf/d to 76.2 Bcf/d while exports to Mexico and LNG terminals look to remain flat week over week. US dry gas production increased by 400 MMcf/d on the day to 93.9 Bcf/d March 17, with most of the growth coming from Texas, according to S&P Global. Canadian imports rose 100 MMcf/d to 4.3 Bcf/d, but LNG imports remained steady at 200 MMcf/d. Total supply came in at 98.4 Bcf/d, up 500 MMcf/d. On the demand side, power burn and industrial increased by 600 MMcf/d and 200 MMcf/d, respectively. Residential and commercial declined by 400 MMcf/d to 24.6 Bcf/d, with the losses largely attributed to the Midcon market. Exports to Mexico fell by 100 MMcf/d to 5.7 Bcf/d, but LNG exports grew by 300 MMcf/d to 13 Bcf/d. Total demand came in at 91.8 Bcf/d, up 600 MMcf/d on the day, but below the six-day average by 14.7 Bcf/d.

U.S. natgas up over 5% on cooler weather, big storage draw (Reuters) - U.S. natural gas futures rose over 5% to a near two-week high on Thursday on forecasts for cooler weather over the next two weeks and a slightly bigger than expected withdrawal from storage due to near-record U.S. liquefied natural gas (LNG) exports. The U.S. Energy Information Administration (EIA) said utilities pulled 79 billion cubic feet (bcf) of gas from storage during the week ended March 11. That was more than the 73-bcf decrease analysts forecast in a Reuters poll and compares with a decline of 16 bcf in the same week last year and a five-year (2017-2021) average decline of 65 bcf. Last week's withdrawal cut stockpiles to 1.440 trillion cubic feet (tcf), or 17.4% below the five-year average of 1.744 tcf for this time of the year. Overall, however, traders noted temperatures were mostly expected to remain at above-normal levels through late March, which should allow utilities to start injecting gas into storage next week - about a week earlier than usual. U.S. front-month gas futures rose 24.2 cents, or 5.1%, to settle at $4.990 per million British thermal units, their highest close since March 4. Data provider Refinitiv said average gas output in the U.S. Lower 48 states was on track to rise to 93.1 bcfd in March from 92.5 bcfd in February as more oil and gas wells return to service after freezing earlier in the year. That compares with a monthly record of 96.2 bcfd in December. With milder spring weather coming, Refinitiv projected average U.S. gas demand, including exports, would drop from 109.6 bcfd this week to 96.0 bcfd next week. Those forecasts were higher than Refinitiv's outlook on Wednesday. The amount of gas flowing to U.S. LNG export plants rose to 12.73 bcfd so far in March from 12.43 bcfd in February and a record 12.44 bcfd in January. The United States has the capacity to turn about 12.7 bcfd of gas into LNG.

Weekly Natural Gas Prices Give Up More Ground as Winter Wanes - As temperatures climbed, weekly natural gas cash prices tumbled. NGI’s Weekly Spot Gas National Avg. for the March 14-18 period dropped 38.0 cents to $4.200. It marked the second straight week of declines, as traders fixated on spring weather and diminishing heating demand.When trading culminated Friday, El Paso San Juan was down 45.0 cents to $3.935, while Columbia Gas was off 38.0 cents to $3.880 and OGT was down 32.5 cents to $3.990.The April Nymex contract, meanwhile, see-sawed throughout the week amid global supply worries and forecasts that pointed to mild weather and modest demand through most of March.The prompt month settled at $4.863/MMBtu to close the trading week on Friday, down 12.7 cents day/day but up 3% from the prior week’s finish.National Weather Service data showed pleasant conditions across much of the Plains, Midwest and East during the week, with high temperatures climbing into the 60s in northern regions and the 70s across much of the rest of the Lower 48.Equally mild conditions were forecast for the week ahead.NatGasWeather called it “an exceptionally warm and bearish” outlook that was likely to usher in the lightest natural gas demand since prior to the onset of winter. “There will be slightly colder weather systems tracking across the northern and central U.S.” late in March, the firm said. This could provide “a minor bump in national demand, although far from strong.”

Williams Expands Haynesville Natural Gas Operations, Eyes Moving RSG for LNG Export --Tulsa-based Williams has clinched agreements with Quantum Energy Partners that include more than doubling its Haynesville Shale natural gas midstream footprint to 4 Bcf/d-plus from 1.8 Bcf/d.In one deal, Williams agreed to pay $950 million for Quantum’s Trace Midstream, which holds East Texas natural gas gathering and processing assets. A memorandum of understanding with Quantum also may lead to a joint venture for the proposed Louisiana Energy Gateway (LED) system. Trace customer and Quantum affiliate Rockcliff Energy also agreed to a long-term capacity commitment to support LED.“Williams continues to increase scale and connectivity in the best and most efficient natural gas basins, and these transactions with Trace, Rockcliff and Quantum represent an important extension of our natural gas-focused strategy,” said Williams CEO Alan Armstrong. “Importantly, this is going to be the flagship of our low-carbon wellhead to water venture, proving up what an important role natural gas can play in reducing emissions, lowering costs and providing secure reliable energy here and around the world.”The transactions could lead to Williams moving responsibly sourced gas (RSG) to markets that include liquefied natural gas (LNG) exports via the mainstay Transcontinental Gas Pipe Line, aka Transco. Quantum is an investor in Project Canary, which uses the Trustwell certification process to differentiate gas supply as RSG.Williams last year completed the takeover of Sequent Energy Management LP and Sequent Energy Canada Corp. from Atlanta utility Southern Company. Sequent was among North America’s largest natural gas marketers by sales volumes. The acquisition is expected to increase Williams’ gas pipeline marketing footprint to more than 8 Bcf/d.Williams over the past year also made some big moves to expand its natural gas gathering and transmission base, including in the Haynesville in a joint venture with private GeoSouthern Energy Corp. Williams recorded gathering volumes of 13.9 Bcf/d in 2021, up 5% from 2020. Contracted transmission capacity was 23.8 Bcf/d, up 3%.

Biden administration approves more LNG exports -The Biden administration said Tuesday that it would issue orders that expand the amount of liquified natural gas (LNG) that it exports as Europe seeks to reduce its reliance on Russian gas.The Energy Department said that two authorizations it issued would give two facilities the ability to export an additional 720 million cubic feet per day of natural gas. In the first half of last year, the U.S. exported an average of 9.6 billion cubic feet per day. The department said that its latest move would give every U.S. LNG export project the ability to export at full capacity. Russia supplied 40 percent of Europe’s natural gas last year. As the world has tried to isolate the Kremlin following its invasion of Ukraine, Europe’s dependence on the country for fuel has come into the spotlight. That has led to calls for the U.S. to expand exports of LNG. LNG is natural gas that has been cooled down to a liquid state so that it can be transported and stored. Climate advocates have raised concern about the fuel’s contribution to climate change. Reuters reported last week that a potential administration review of ways to increase LNG exports was shelved amid climate concerns.

API applauds DOE approval of two new LNG export permits - American Petroleum Institute (API) President and CEO Mike Sommers applauded the U.S. Department of Energy’s decision to approve two new liquified natural gas (LNG) export permits. “We applaud the Department of Energy for advancing two important U.S. LNG permits at this critical time in history. America is the best prepared nation to help Europe and our other allies meet rising energy demand amid international turmoil while furthering our shared goal for a lower carbon future. We will continue working with the department to ensure a timely and efficient permitting process to advance U.S. LNG export projects, which are key to supplying the affordable, reliable and cleaner energy the world needs now and in the future.”

How Refined FERC Policies Will Affect New LNG Terminals - The Federal Energy Regulatory Commission (FERC) issued two new statements of policy February 17 regarding the certification of new pipelines and the assessment of greenhouse gas (GHG) impacts. Together, the two updates reflect a more meticulous regulatory environment and a stricter adherence to policies that midstreamers must comply with in an effort to avoid lengthy and expensive court challenges that have become more commonplace recently. The guidelines will affect most new projects within FERC jurisdiction and, among those, some of the biggest impacts will be felt in the U.S.’s rapidly expanding LNG sector — the terminals themselves and the pipelines that deliver feedgas to them. That could be cause for concern as Russia’s war on Ukraine has exacerbated an already precarious gas situation in Europe and a global LNG supply crunch. In today’s RBN blog, we explain the impact of FERC’s latest guidance on pipeline certification and GHG policy with regard to the LNG sector. In Part 1, we looked at the clarifications provided by FERC regarding the Updated Certificate Policy Statement (PL18-1) and Interim GHG Policy Statement (PL 21-3). We concluded that, overall, the Certificate Statement of Policy (SOP), which outlines the criteria that new FERC-regulated projects must meet for certification, would put a renewed emphasis on factors other than precedent agreements such as community impact, but really it just echoes what the FERC is already doing. So, while the Certificate SOP represents a recommitment to more stringent standards that new projects must meet, prudent project sponsors would have anticipated and planned for those hurdles. In other words, it shouldn’t be a big step change from the criteria already being applied. In contrast to the Certificate SOP, which has already been in effect for decades, the GHG SOP will eventually lead to a final policy statement after the commission receives comments. Depending on the language included in the GHG policy once finalized, it is likely to require an Environmental Impact Statement (EIS) for projects with a relatively low emissions threshold of 100,000 metric tons per year (MT/year). The preparation and approval of an EIS is much more time-intensive than the Environmental Assessment (EA) and could eventually end up being a bigger burden to new projects, especially if the final version of the guidance includes a requirement to assess the downstream impacts of Scope 3 emissions — those related to the ultimate consumption of natural gas and other hydrocarbons. As the guidance exists now for the two SOPs, the impact to most gas projects should be fairly minor, but that is true only because the environment at FERC and the U.S. Court of Appeals for the DC Circuit was already much tougher after a changing of the guard inside those organizations in the last couple of years. However, those tougher standards are already significantly lengthening the time it takes to move through the FERC approval process, adding even more uncertainty to midstream development. That’s a tough pill to swallow for the developers of smaller projects that may not have the economies of scale to address such rigorous standards. From a macro, long-term view, though, the biggest potential impact from the Certificate and GHG SOPs combined may be to the huge LNG export facilities aiming to send U.S. gas into the international market and the pipelines that feed the terminals. Importantly, the SOPs will impact some projects more than others.

Final state-level Line 5 tunnel decision expected as climate considered - Michigan regulators are expected to soon decide whether to allow a Canadian company to build its planned Line 5 tunnel through the bedrock beneath the Straits of Mackinac and at least part of the decision will be based on climate impacts. Friday, March 11, marked the last day for rebuttal briefs to be filed in the project’s pending permit review before the Michigan Public Service Commission (MPSC). Now the three-member panel will read all the presented evidence and decide whether to give Enbridge’s tunnel plan the final state-level green light.

Michigan's Whitmer Looks to Shut Down Major Fuel Pipeline as Region Suffers From High Gas Prices -At a time when American consumers are paying the highest average prices ever for gasoline, Michigan Governor Gretchen Whitmer persists in efforts to shut down one of the most important pipelines moving fossil fuels between Canada and the United States. Whitmer is seeking to shut down the Enbridge Line 5, which transports synthetic crude, natural gas liquids, sweet crude, and light sour crude between Wisconsin and the states of Michigan, Ohio, and Pennsylvania and the Canadian provinces of Ontario and Quebec.Whitmer has been at war with the pipeline for a couple of years now. In November of 2020, the governor revoked an easement for the pipeline in the Straits of Mackinac that has stood since 1953. According to the governor, Enbridge has repeatedly ignored structural problems on the pipeline, making it too hazardous to continue to move fossil fuels through her state.“Here in Michigan, the Great Lakes define our borders, but they also define who we are as people. Enbridge has routinely refused to take action to protect our Great Lakes and the millions of Americans who depend on them for clean drinking water and good jobs. They have repeatedly violated the terms of the 1953 easement by ignoring structural problems that put our Great Lakes and our families at risk,” Whitmer said in 2020.“Most importantly, Enbridge has imposed on the people of Michigan an unacceptable risk of a catastrophic oil spill in the Great Lakes that could devastate our economy and way of life. That’s why we’re taking action now, and why I will continue to hold accountable anyone who threatens our Great Lakes and fresh water.” Enbridge denies that the pipeline is in poor shape and has continued to use it despite Whitmer’s revocation of the easement. In addition, Line 5 moves more than half a million barrels of oil and natural gas liquids each day throughout Canada and the Great Lakes. A shutdown could be disastrous to gasoline prices, which are already through the roof.

Maryland firm to review environmental impact of Line 5 tunnel --— The U.S. Army Corps of Engineers has picked a Maryland firm to perform a multi-year environmental review of a proposed oil pipeline tunnel under the Straits of Mackinac. Potomac-Hudson Engineering Inc. will analyze plans by Enbridge to build a utility tunnel that would house a rebuilt section of its Line 5 pipeline — a significant and controversial fossil fuel infrastructure project that’s in the final stages of state-level permitting. Potomac-Hudson (PHE) will prepare an environmental impact statement (EIS) on the project, as ordered by Army Corps leaders last summer. The third-party contractor was announced Monday, March 14. According to its website, PHE performs regular contract work for the U.S. Department of Defense. It has created environmental impact statements on energy, coal gasification and carbon capture projects in multiple states. The EIS is a lengthy and comprehensive analysis under the National Environmental Protection Act (NEPA) that considers alternatives to a project as well as cumulative impacts and foreseeable development in the project area. Enbridge had applied for a more limited “environmental assessment.” The Army Corps Detroit District said in a Monday release that Enbridge would pay for the analysis, but the Corps is “responsible for the EIS scope and content to ensure an independent review.” The Army Corps said it will begin project scoping this year and the process would include public comment on potential impacts and alternatives. Overall, the Army Corps said it expects the process to last two years. Such environmental analyses typically last between two and six years, according to a federal review initiated under the Trump administration. Assuming Enbridge is able to secure all its state-level permits, a federal approval in two years would potentially allow the company to begin tunnel construction in 2024 — a project launch date disclosed last year in state documents posted online in response to a lawsuit. Enbridge received approval from the Mackinac Straits Corridor Authority in February to begin seeking tunnel construction bids from general contractors. The proposed tunnel is expected to take about four years to build, pushing completion into 2028 or beyond. Under terms of a 2018 agreement between Enbridge and former Republican Gov. Rick Snyder that paved way for the project, construction of the tunnel was expected to be finished in 2024.The tunnel would run through bedrock between Point LaBarbe and McGulpin Point. It would house a new 30-inch pipeline for light crude oil and liquid natural gas, replacing the existing dual submerged lines which have been operating since 1953.

Line 5 drilling method raises environmental concerns -Enbridge's plan to relocate a portion of its Line 5 pipeline in northern Wisconsin could involve a drilling method even the company admits will likely release toxic chemicals into surrounding waters. Horizontal Directional Drilling (HDD) is a common method for building pipelines under bodies of water, and it sometimes leads to "frac-outs," or drilling-fluid leaks. Bobbi Rongstad, who lives in northern Wisconsin, said she has serious concerns about the plans to use HDD on Line 5. For her, the issue literally hits close to home, as the oil pipeline would cross under two streams running through her property."I used to work in the utility industry, and it's a great thing for shoving a gas line under a sidewalk, not messing up somebody's front lawn," Rongstad explained. "But when they're doing 30-inch pipe and going 60 feet under the bottom of the river, which is what's proposed, things can go wrong." In an email to a Minnesota state senator about Enbridge's similar, Line 3 project, the company acknowledged frac-outs are "a generally known and common risk," but argued HDD is still the least environmentally-destructive method for laying new pipeline under bodies of water.While Rongstad generally agrees, she contended the line should not be placed in the areas around Lake Superior, where any leaks could have far-reaching impacts.In Minnesota, state officials report more than half of the 21 HDD crossings for Line 3 have been polluted with drilling fluid.Rongstad said Wisconsin does not have any significant HDD regulations, although the Department of Natural Resources (DNR) is accepting comments on its draft technical standards for the process. "If the DNR were able to put some more regulation on it, I would sure feel better," Rongstad stressed. "But they're not going to be able to do that midstream, you know? The application is in front of them, and they're going to get pressure from Enbridge."

DNR extends comment deadline on Enbridge Line 5 environmental review -- (videos) isconsin environmental regulators have again extended the deadline for comments on the review of Enbridge Energy’s proposed relocation of an oil pipeline through northern Wisconsin.The Department of Natural Resources said Wednesday that it is reviewing more than 10,000 written comments on its draft environmental impact statement on plans to bypass the Bad River Reservation with a new pipeline.Nearly 300 people attended a nearly 10-hour online hearing last month where most spoke against the project.Released in December, the review has drawn criticism from environmental groups, tribal governments and thousands of people who say it is incomplete and riddled with errors.The DNR says extending the comment period is reasonable given the project’s complexity and the amount of information and “hopes the extended comment period will provide the public with ample time” to comment on the more than 700-page document. Written comments on the environmental review can be submitted through April 15.

US-23 reopens after natural gas pipeline explosion; investigation into cause continues - —US-23 in northern Livingston County is open in both directions after closing during the morning of Wednesday, March 16, following a gas explosion.Michigan State Police officials said the highway was reopened as of 1:30 p.m. Wednesday. The road was closed due to a gas explosion just north of Center Road in northern Tyrone Township. Police said it appears a natural gas pipeline exploded, spreading debris.In a statement, RoNeisha Mullen, Senior Communications Consultant with Consumers Energy, said crews are on-site and called the incident “a leak in a natural gas transmission line.”“We are working with local public safety officials to continue ensuring the safety of the situation and shut off the flow of natural gas,” the statement says. “There have been no injuries, and service has not been affected thus far to any of our customers. We appreciate the community’s patience and encourage any customers who smell natural gas to contact us at 800-477-5050.” The cause of the leak and explosion has yet to be determined, Mullen told MLive-The Flint Journal in an email.

Marathon Petroleum Shuts Oil Pipeline After Leak in Illinois -- Marathon Pipe Line Inc. has shut down a pipeline in Illinois that leaked crude oil into a local canal, the company said on Saturday. The leak into the Cahokia diversion channel was first detected on Friday morning and booms were deployed to try and contain the oil, parent company Marathon Petroleum Corp. said in a statement. An estimated 165,000 gallons were released into the canal before containment, the Illinois Environmental Protection Agency told local news station KTVI. The leak happened near Edwardsville, a city of more than 26,000 people. There are no water intakes or private wells in the immediate vicinity, according to Marathon. The cause of the rupture is under investigation. “Resources deployed to the area for cleanup activities include boom, vacuum trucks, skimmers, and excavating equipment. Additional personnel and equipment are en route to the location to assist in cleanup activities,” it added.

EPA asks Illinois AG to ensure proper cleanup of oil spill (AP) — Federal officials want Illinois' attorney general to ensure that a pipeline operator conducts a proper cleanup after an estimated 165,000 gallons (624,592 liters) of crude oil spilled in southern Illinois. The oil leak started Friday morning in Edwardsville near Illinois 143 and entered Cahokia Creek, which runs parallel to the pipeline just north of the city. Marathon Pipe Line, which operates the pipeline, shut it down and sent equipment and workers to contain and clean up the oil, the Belleville News-Democrat reported. EPA officials have asked Illinois' attorney general to ensure that Marathon remediates the spill, assesses and repairs the pipeline, investigates the extent of the spill and its effect on groundwater, and submits and implements a corrective action plan. Marathon issued a statement on Friday saying it had made required regulatory notifications. The company said air monitoring has detected no hazardous level of emissions and said no water intakes or private wells are located “in the immediate vicinity” of the leak. Marathon said some wildlife have been affected and experts are on site to treat them, but it did not provide specific details about the amount of animals impacted by oil.

How much Marathon oil leaked in Edwardsville, Cahokia Creek? -- The Illinois Environmental Protection Agency has asked the Attorney General to enforce cleanup and other action by energy company Marathon Pipe Line after an estimated 165,000 gallons of crude oil leaked from its pipeline in Edwardsville, some of which flowed into a creek, according to the state agency. The oil leak started Friday morning in Edwardsville near Illinois 143 and Old Alton Edwardsville Road and entered Cahokia Creek, which is parallel to the pipeline. The cause of the leak was not immediately clear. Marathon wrote in a statement that an investigation will be conducted. The company stated that it shut down the pipeline when it detected the leak Friday morning and that cleanup efforts have been underway since. It added that no injuries have been reported, air monitoring has detected no hazardous level of emissions and no water intakes or private wells are located “in the immediate vicinity” of the leak.Some wildlife has been affected, and experts are on site to treat them, according to Marathon. The company did not provide specific details about the amount of animals impacted by oil. The city of Edwardsville announced at 11:45 a.m. Friday that its fire department and teams from the Madison County Emergency Management Agency, Madison County Hazmat, Phillips 66 Wood River Refinery and Marathon were all responding to the site of the oil leak. The National Transportation Safety Board, a federal agency that investigates “hazardous pipeline events” and other issues, also said it sent a team of investigators to Edwardsville. Residents reported a strong smell of gas, and the city said in an update Friday afternoon that the odor was a result of the leak. By 5:30 p.m. Friday, the Illinois Environmental Protection Agency provided the initial estimate that 3,000 barrels, or 165,000 gallons, of oil were released from the pipeline.

Marathon Oil spill still being cleaned up in Edwardsville — Crews from Marathon Oil, the Federal Environmental Protection Agency, Illinois Environmental Protection Agency and Edwardsville Fire Department and Hazmat crews are working together Monday morning to clean up an oil spill that happened Friday afternoon. Crews are also working to repair the leaking Marathon crude oil pipe that caused the spill. According to an update by the Edwardsville Response Team, as of 7 p.m. on Sunday, approximately 2,900 barrels of oil and water mixture have been recovered from the Cahokia diversion channel. But there's still work to be done. In a Friday evening statement to 5 on Your Side about the spill, the spill was estimated to have been about 165,000 gallons of released oil. Initial reports estimated the release at 3,000 barrels of oil. The spill happened near the intersection of Illinois State Route 143 and Illinois State Route 159 near Old Alton Edwardsville Road. The Marathon pipeline runs parallel to Cahokia Creek. Oil was spotted flowing out of the bank on the creek along the pipeline. More than 4,000 feet of boom barriers have been put out to contain the oil on the water. Fifty vacuum trucks and eight skimmers are being used to remove the oil from the water, and boats are now being deployed on the channel to help collect the oil. In viewer photos sent to 5 on Your Side, a thick layer of oil can be seen sitting on top of the water in the Cahokia Creek and coating the banks. Crews have shut down some roads and are working as quickly as possible to clean up the spilled oil. Wanda Road is blocked off from New Poag Road to Wagon Wheel Road. Old Alton Edwardsville Road is closed from Illinois State Route 143 to the west side of the Cahokia Canal. A strong smell of oil has been reported near the worksite. The Edwardsville Response Team said in a Sunday night update, “There have been reports of odors near areas affected by the release, and air monitoring resources continue to be deployed in the area as a precaution. Air monitoring has detected no hazardous level of emissions.” Response crews are worried about how the spill could hurt animals in the area. Veterinary staff is on site to treat any animals they come across. If you see an animal impacted by the oil, you’re advised to call for help.

Edwardsville pipeline fixed; crews still cleaning up oil spill — The Marathon Pipe Line leak has been repaired, and operations restored, as crews continue cleaning up last week’s oil spill. About 3,900 barrels of crude oil spilled in the Edwardsville area, including the nearby Cahokia Creek. The leak was reported on March 11. FOX 2’s Bommarito Automotive Group SkyFOX captured footage of crews fixing the pipeline. Authorities greenlighted Marathon to restart operations amid clean-up efforts. Marathon Petroleum Corporation, the parent company of MPL, said in a statement that there have been reports of odors in areas near the spill — but air monitoring has not detected a hazardous level of emissions. “I smelled this awful smell,” said Bunker Hill resident Paula Mansholt. “I just feel bad for the people that are living around here.” The Illinois Environmental Protection Agency is working with the state’s attorney general to oversee the cleanup. Mike Firsching, of Fort Russell Veterinary, owns a dozen acres of land that extends to the pipeline. Some of the oil spilled onto his land. “When you come back here, you would think you’re at a theme park. Everything is lit up bright. There’s noise and flashing lights and honking,” Firsching said. As a vet, he’s no stranger to helping sick animals. When an owl covered in oil appeared in his parking lot, his team sprang into action. “He was definitely distressed,” said Firsching. “He couldn’t fly. He couldn’t get off the ground, so I told my staff that we finished up on a surgery we were doing and said the owl is next.” Firsching and his team bathed the owl, whom they named Ollie, and turned him over to local wildlife rehab. Treehouse Wildlife Center has taken in and treated seven ducks, one frog, one hawk, two beavers, and three turtles. Unfortunately, several other animals died from the spill at the scene.

Oil pipeline leak in Illinois could show up in Cushing inventory levels (Reuters) – A pipeline leak in Illinois that began last week and has since been fixed could add some buoyancy to oil inventory figures at the Cushing, Oklahoma, storage hub, which saw nine straight weeks. decline has been observed.A leak on a pipeline in Edwardsville, Illinois, released about 3,900 barrels of crude last week before being repaired. Marathon Petroleum Corporation, The parent of Marathon Pipeline, the operator of the pipeline, said Tuesday that its crews were still extracting crude from the area. National Transportation Safety Board spokeswoman Jennifer Gabris told Reuters that treatment efforts were still underway. Although the release was near the shores of Cahokia Creek in Edwardsville, no crude oil made it downstream into the Mississippi River, the spokesman said.

Milwaukee oil spill evaluation ongoing - Wisconsin Examiner - The Department of Natural Resources (DNR) is continuing to evaluate the full impact of an oil spill that occurred in West Milwaukee last December. Originating from the Komatsu Mining Corp. facility nearby, the spill released approximately 400 gallons of oil. The oil leaked into storm drains and manifested as a sheen on the Menominee River in Milwaukee. DNR spokesperson Sarah Hoye told Wisconsin Examiner that a snowy owl and one Canadian goose were taken to a local Humane Society. “Both have made recoveries and were released,” said Hoye. Additional investigation into wildlife impact, particularly as winter weather gradually gives way to spring, are ongoing. Milwaukee Riverkeepers, a local environmental organization, also monitored the spill closely. One lingering question the group had was what kind of oil was released into the river. “Based on the information provided by Komatsu,” said Hoye, “the discharge was a mixture of lightweight, used oils including coolants, cutting fluid, hydraulic, lubricating, way, quench, gear grinding and cutting oils.” She added that Komatsu informed DNR that “the release occurred for approximately 90 minutes.” Komatsu expressed regret for the spill in a statement released in December. The same month, the company opened a new facility in Milwaukee’s Harbor District. Clean-up activities were performed from mid-January until the water froze over, explained Hoye. “The investigation and cleanup are still ongoing awaiting warmer weather to evaluate the effectiveness of the clean-up effort and the need for any subsequent follow up.” The DNR is also continuing to evaluate the circumstances of the release, which will shape what, if any, penalties will be levied against Komatsu.

Kansas oil companies scramble to increase production, but 'there is no spigot' - Skyrocketing gas prices have everyone from independent truck drivers to the U.S. energy secretary demanding that oil companies ramp up production. They’d like to and they’re trying to, but it’s just not that easy. To understand why oil prices are high today, you have to go back two years, to the early days of the pandemic. Oil prices hit the floor in April 2020. In fact, they fell right through the floor. For a while, oil producers had to pay companies to take oil off their hands. One day, the price in Kansas even hit a negative $47 a barrel. Some small oil companies went under. In Kansas alone, companies took almost 5,000 wells off-line and production plummeted. But between then and now, the price of oil has increased about $160 a barrel. “It’s probably the most dramatic price swing in the history of the oil business,” “And that’s not good for anybody.” With the ban on Russian oil imports, domestic crude is now selling for about $110 a barrel. That, of course, isn’t good for consumers, who’ve seen gasoline prices break records. The pain falls especially hard on lower-income workers, who often drive older cars miles to work each day and spend more of their paychecks filling their tanks. It’s sparked demands from fossil fuel users and politicians to get more domestic oil to consumers — as if oil companies can just turn the flow back on. “There is no spigot,” Thompson said. “Wells capable of producing crude oil and natural gas in this country are producing at close to maximum capacity.” But oil companies, especially smaller ones, are having a tough time expanding production. “They’re having trouble getting pipe. They’re having trouble with transportation. They’re having trouble finding crews,” said Dan Naatz, executive vice president of the Independent Petroleum Association of America. Oil companies have been trying to scale up for months now, and that’s made basic supplies of the trade, like piping, both scarce and expensive. And pandemic-related shipping problems have made just getting supplies from factories to the oil fields a major obstacle. On top of that, there’s a labor shortage. “Labor challenges are at the top of the list,” said Ed Cross, president of the Kansas Independent Oil and Gas Association. Small oil Kansas companies cut as much as a quarter of their employees in the lean days of 2020, Cross said. Those are skilled, technical, often physically demanding jobs, so staffing up again is another major hurdle.

Drilling permits spiked then plunged under Biden - Although the Biden administration last year approved more permits to drill oil and gas wells on public lands than the Trump administration in its first year, Interior Department data shows approvals have been more modest for months. In fact, the Bureau of Land Management in January approved just 95 permits for oil and natural gas wells across federal lands in the United States, an 85 percent drop from a zenith of 643 issued last April, according to a review of permitting data by E&E News. Many environmental groups have been frustrated with the rapid pace of approvals, which carved into the number of backlogged permits President Biden inherited by nearly 1,000 by year’s end, seeing it as a betrayal of Biden’s pledges to confront climate change. But the output from BLM offices in states like New Mexico and Wyoming has gradually declined, and overall permit approvals have dropped after particularly high outputs in the spring and early summer of last year, according to the data. Last month, permit approvals rallied from their January bottom to 186. But that was still the fourth lowest number of monthly approvals since Biden took office. Melissa Schwartz, a spokesperson for the Interior Department, which oversees BLM, defended the agency’s efficiency, arguing that the amount of time it takes to approve federal wells has fallen by half over the last decade. “The BLM continues to process applications for permit to drill in a timely manner,” she said in an email. Schwartz also noted that the oil and gas industry holds significant drilling rights already. Many of the drilling permits held by industry — and 60 percent of the acreage leased to oil producers — sits unused, she said.The Biden administration's policies about oil and gas development on public lands and the industry’s war chest of existing oil and gas leases have become key talking points as energy prices have climbed in recent months. Both have come into sharper focus in recent weeks, as Russia's invasion of Ukraine drove prices further up.

Biden, Democrats take aim at oil companies for high prices - After weeks of inconsistent messaging on rising energy costs, congressional Democrats and the White House are uniting behind a strategy of blaming oil companies for high prices at the pump. House Energy and Commerce Chair Frank Pallone (D-N.J.) announced yesterday that he’s asking executives from six oil companies to appear before his committee on April 6 with the intent of asking them why energy prices are rising. Similarly, Senate Majority Leader Chuck Schumer (D-N.Y.) yesterday called for energy executives to testify in the Senate on charges of price gouging. The Senate hearing could find a home in the Commerce, Science and Transportation Committee. “I am deeply concerned that the oil industry has not taken all actions within its power to lower domestic gasoline prices and alleviate Americans’ pain at the pump,” Pallone wrote to the six oil companies. “Instead, the industry appears to be taking advantage of the crisis for its own benefit.” Pallone sent letters to Bernard Looney, chief executive officer of BP PLC; Michael Wirth, chair and CEO of Chevron Corp.; Rick Muncrief, president and CEO of Devon Energy Corp.; Darren Woods, CEO of Exxon Mobil Corp.; Scott Sheffield, CEO of Pioneer Natural Resources Co.; and Ben van Beurden, CEO of Shell PLC. It was not immediately clear if the executives would attend, though Pallone could force attendance with a subpoena. Pallone highlighted two claims made repeatedly by Democrats in recent days. One is that companies are using record profits to pay hefty dividends or to buy back stock from shareholders, and the other is that they are not doing enough to increase domestic production given the embargo on Russian oil and gas. Pallone also seemed to have his eye on curtailing some energy tax credits — an idea popular with Democrats. He noted energy companies are reaping profits via higher prices while using “generous production tax incentives provided by American taxpayers.”

Oil Companies Lament Rising Price Of Joe Manchin —In the wake of global turmoil and worsening inflation, oil companies were lamenting the rising price of Joe Manchin, sources confirmed Tuesday. “With the economy what it is and a split Senate, it seems like the price just keeps going up and up nearly every day,” said ExxonMobil CEO Darren Woods, who was just one of many industry executives left suffering from sticker shock after learning how much the West Virginia senator was now asking for. “It definitely hurts, but what other option do we have? I guess that’s what happens when too many people want access. Then again, maybe it’s on us for not diversifying our Senate power sources.” At press time, several reports indicated that a long line of oil executives waiting outside Manchin’s door had begun to wrap around the block.

Is Joe Manchin Lucy or the Football? - It’s pretty remarkable to see Big Oil via its current favorite front, Joe Manchin, push for “Frack baby, frack” when shale gas will not substitute for Russian oil. And worse, apparently no one in the climate change opposition has bothered to learn enough about oil production and refining to call this nonsense out. Yours truly is NOT on the energy beat. The fact that I’ve worked that “fracking will not solve our Russian oil problem” with only minimal contact with this topic, and supposed full-timers haven’t, is yet more proof of why the left sucks. It can’t get past emotionally-appealing sloganeering to understand how things actually work.The US needs heavier grades to mix in with very light (shale gas) or light (Saudi light sweet crude) to produce diesel and home heating oil. Russian oil is apparently moderately heavy and therefore a very productive source for diesel and home heating fuel. Absent heavier grades, we have a problem with diesel, already in short supply globally, and home heating fuel. Yes, they apparently can be produced from lighter grades, but those “lighter” grades have shorter carbon chain which means are lower energy density. So using light sweet crude to make diesel is inefficient and will put price pressure on gasoline.The US was willing to suddenly kiss and make up with Venezuela to get heavy crude for mixing purposes. Even though the Biden Administration had allegedly been thinking of “normalizing” relations with Caracas, it hadn’t done much of anything along those lines. So its plan to make nice in exchange for Venezuela’s oil ran into a firestorm of criticism and the Administration chickened out. And even if that initiative had succeeded, it would not have provided enough heavy sour crude to fully replace the lost Russian supply.And don’t fool yourself about Canadian tar sands. From reader Skeptic:“Syncrude” from tar sands oil is extremely light after pre-refining and, therefore, maybe not so helpful for diesel. Venezuelan oil is heavy and sour–also has high vanadium which will poison refinery catalysts. They are not good substitutes for each other…I think the Canadian syncrude is mostly expected to be exported from our Gulf Coast rather than refined in USA. That would be why one of the arguments against Keystone XL is that Canadians should build their own pipeline from Athabasca to a port in British Columbia and not put USA water at risk. Second, from Hill Heat, there’s this:Joe “Lucy” Manchin is pulling away the climate football from the Charlie Brown Democrats. After President Joe Biden and his top advisors called for a full mobilizationfor clean energy independence, Manchin got to work. On Thursday, he called for amassive increase in oil and gas drilling. On Friday, he got rapturous applause from oil and gas executives as he trashed federal backing for electric vehicles. Today, he announced his opposition to climate hawk Sarah Bloom Raskin’s nomination to the Federal Reserve. It’ll be fun to see what he kills next.I’m sincerely hoping that the advocates who are paid quite well to convince the U.S. Congress to enact strong climate policy now adjust their strategy away from “make a deal with Manchin,” because it ain’t gonna happen.

Can Lower 48 E&Ps Ramp Up Production? Not So Fast, Execs Say - It will take more than $100/bbl oil and an energy crisis in Europe for Lower 48 exploration and production (E&P) firms to substantially raise production, according to executives from three leading onshore producers who spoke at the CERAweek event in Houston. Pioneer Natural Resources Co. CEO Scott Sheffield told the CERAWeek by S&P Global conference earlier this month that U.S. sanctions on Russian oil and gas have temporarily impacted global supply. Still, he offered a caveat. “Nobody believes this problem is long-term.” Sheffield, who helms one of the largest oil and gas producers in the Permian Basin, cited steep backwardation in the long-term oil price curve as evidence that the market does not expect supply constraints to linger. Short-term, he said Saudi Arabia and the United Arab Emirates are the only countries in position to replace a meaningful portion of the supply lost from Russia. “Longer term, it could be U.S. shale and Canada,” Sheffield said. Those North American countries, he noted, accounted for most global supply growth over the last decade. He also offered a dose of pessimism about current circumstances. “Most people on Wall Street still think our industry’s going to be gone in 10 years, and most people in the Biden administration, they want our industry gone in 10 years based on their rhetoric. So you’ve got to have a change in mindset from the Biden administration of their rhetoric…” Sheffield said despite the war in Ukraine, investors are telling him not to expand oil and gas production. He told the audience they have said, ‘“Scott, do not grow more than 5%, regardless.” He didn’t rule out that this mindset could change, particularly if the humanitarian conflict worsens and the supply-demand picture tightens further, but “none of us are going to jump out.” He added, “and then you’ve got to deal with the supply constraints,” and shortages of labor and materials such as fracturing sand. “It would take a good 18 months to get the industry going again to grow a lot more than the projections that people are showing.

President of Texas Oil & Gas Association: Ukraine crisis shows link between national security, energy security - The president of Texas Oil & Gas Association says the crisis in Ukraine should be a wake-up call when it comes to energy policy. Speaking at a meeting of the East Texas Gas Producers Association in Carthage, Todd Staples said the conflict painfully demonstrates the link between national security and energy security. “The invasion of Ukraine really highlighted that,” Staples said in an interview with KLTV. “And I talked (today) about the need to talk about the importance of oil and gas in our daily lives. How oil and natural gas is the basic building block of 96% of the components that we use each and every day. And we need to be telling that story.” Staples says pain being felt by consumers at the gas pump is the result of things like cancelled pipeline projects, delayed approvals for permits, and poor short-sighted decisions, all made worse by the war. “In America, the message has been we want to stop oil and gas production and we want to move it to other parts of the world,” he said. “And that has led to this situation being compounded, being much worse on consumers who are paying much higher prices at the pump than they have to pay,” Staples said. And he says expanding oil and natural gas production takes time, requiring planning and investment. “The marketplace has to work these things out,” he said. “It doesn’t happen overnight.” Staples said efforts by the Biden administration have hindered energy growth and security. “If we want energy security, and we also want to reach environmental goals, the only way to do that is to have domestically-produced energy.” Staples said. “And have oil and gas jobs in Texas and in America, not in other countries around the globe.”

Texas oil and gas has gained 16,000 jobs in the past year, new report says - The Texas Independent Producers and Royalty Owners Association announced Friday the Texas oil and gas industry saw gains of more than 1,000 jobs between December 2021 and January 2022 — and more than 15,000 positions in the past year.The newly released figures are from the U.S. Bureau of Labor Statistics and are adjusted against unemployment tax records by TIPRO in its employment calculations.TIPRO’s analysis found that Texas employment in January totaled 176,300 jobs — an increase of 1,200 jobs from the revised December numbers. Texas employment for January 2022 totaled 176,300, an increase of 1,200 jobs from revised December numbers. This number also reflects an increase of 16,000 positions since January 2021.AdThe TIPRO report noted January’s job posting data in the upstream, midstream and downstream sectors is on the rise along with rising employment, with 8,276 active job postings in the Texas oil and gas industry in January, with more than 3,000 of that number added in January alone.TIPRO identifies 14 different industry sectors within the Texas oil and natural gas industry. The sector with the highest number of unique job listings in January was support activities for oil and gas operations, which had 2,555 postings. This was closely followed by 1,022 positions in the petroleum refineries sector and 787 postings in crude petroleum extraction.Sought-after positions included heavy tractor-trailer truck drivers with 420 postings and personal service managers with 283 postings.The top three cities for unique oil and natural job postings were Houston, Midland and Odessa, according to TIPRO, and the top three companies for job postings were Halliburton with 418, National Oilwell Vasco Inc. with 408 and Baker Hughes with 381.

EIA: U.S. Shale Production Set For Big Jump In April - U.S. shale oil production in the seven most prolific shale basins are set for their biggest rise since March of 2020, according to new EIA data. The Energy Information’s Drilling Productivity Report is estimating that the total production in the seven major U.S. shale basins will rise by 117,000 bpd next month, to 8.708 million bpd, according to the EIA’s latest version of the Drilling Productivity Report. The news comes as U.S. crude oil production finds itself in the spotlight as to the reasons they are not producing more. Regardless of the EIA’s estimate for additional crude oil next month, projecting U.S. shale oil production, isn’t an exact science. For its February report, the EIA had forecast that March’s crude production would reach 8.707 million bpd in the seven most prolific basins covered by the report. Instead, March’s production reached only 8.591 million bpd, with production in the Permian undershooting EIA forecasts by 60,000 bpd. For April, the EIA now sees U.S. crude in the Permian rising from 5.138 million bpd to 5.208 million bpd—a 70,000 bpd rise. The Eagle Ford is expected to see the second largest increase with a 23,000 bpd rise to 1.146 million bpd. The Bakken is expected to increase by 16,000 bpd. The EIA has estimated that the number of Drilled but Uncompleted wells (DUCs) fell 156 to 4,372 for the month of February. The DUC count—or fracklog—is often seen as a bellwether for the state of the oil industry. Higher DUC counts often signal that oil companies are comfortable spending money on wells that are unfinished and no producing. The DUC count in the United States has been falling since mid-2020. The way the EIA calculates DUC wells, however, has been questioned, as there are numerous wells that have been unfinished for years and are extremely unlikely to ever be completed.

Oil companies hedging less future production as crude prices rise— Even before Russia’s invasion of Ukraine sent shockwaves through the oil market, U.S. shale producers—financially fit again and egged on by investors looking for more commodity exposure—had been exiting their price hedges for months. Muncrief Muncrief Now, with oil closing above $100 a barrel every single day this month, the era of shale producers selling a significant share of future output to protect against potential price declines might be over for now, people familiar with the deal flows said. Oil executives, buoyed by the best financial performance in years, are wagering that higher prices are here to stay for at least the foreseeable future as the supply-demand equation fundamentally shifts. “You’re going to see less hedging activity because management is more optimistic,” said Paul Cheng, an analyst at Scotiabank. “The best hedge is a strong balance sheet.” Since the shale boom began in the early 2010s, U.S. producers have routinely pounced on rallies to lock in prices. That risk management helps them ensure the cash flow required to make capital expenditure commitments. Producers, many of whom were already doing some hedging, got even deeper into the practice after April 2020 when the price of crude turned briefly negative. “Management teams have greater FOMO being hedged in a runaway market.” Since then, West Texas Intermediate crude, the U.S. benchmark, has made a stunning recovery, soaring above $130 a barrel in intraday trading this month to the highest levels since 2008. Prices have since come off slightly, closing Monday at $103.01—the lowest settlement all month but still the 10th straight session above $100. “Management teams have greater FOMO,” or fear of missing out, “being hedged in a runaway market,” said Michael Tran, an analyst at RBC Capital Markets. With prices rising and companies’ books stronger than they’ve been in years, many drillers are opting out of their usual hedging activity. “Fortified corporate balance sheets, reduced debt burdens and the most constructive market outlook in years has sapped producer hedging programs,” he said. Pioneer Natural Resources Co., the biggest oil producer in the Permian Basin, has closed out almost all of its hedges for this year in order to capture any run-up in prices. Shale producer Antero Resources Corp. is the “least hedged” in the company’s history, its finance chief said last month. Devon Energy Corp. is only about 20% hedged, compared to around 50% normally, and it plans to stay that way as prices show few signs of slowdown.

Study finds flaring can impact the health of people 60 miles away - A new paper looking at the health impacts of flaring in the Bakken area of North Dakota found that people 60 miles away can experience respiratory distress because of flaring. The impacts have significant economic effects that should be considered in regulatory policy, the researchers said. The lead author, Wesley Blundell, said these impacts could be even more pronounced in the Permian Basin, where flaring in 2020 was greater than the flaring in the Bakken during the study time period and population density, at least in west Texas, is greater than in North Dakota. Blundell is an assistant professor at the School of Economics at Washington State University and said he approached the topic largely from an economic perspective, including placing a dollar value on the public health impacts of flaring. This estimated dollar impact is based on the amount of natural gas flared. The study was published in the peer-reviewed Journal of Public Economics. Blundell said he accessed proprietary hospital data and looked into the hospitalizations for respiratory illness. He and his co-author also gathered the GPS locations of wells and monthly flaring reports from those sites. “We were able to start really digging into what the relationship was and how big the relationship was between the flaring of this unprocessed natural gas and all the contaminants that come with it and the respiratory health of the individuals who live up to 60 miles downwind,” he said. They found that an increase in flaring of 1 percent can lead to a 0.73 percent increase in hospitalizations. In North Dakota, the study found an increase of 11,000 hospital visits. The time period examined was early in the Bakken boom from 2007 to 2015. The New Mexico Oil and Gas Association states in a report that flaring is done in an “attempt to eliminate potentially unsafe, flammable vapors and to destroy unwanted emissions of methane and [volatile organic compounds.]” The reason behind flaring is usually safety concerns or transportation constraints, the organization states. NMOGA further states that the alternative to flaring is often venting, which leads to more emissions. Flaring also occurs after a well is completed because the natural gas that is initially produced cannot be handled by the production facilities as it includes flowback, or components from the fracking process like sand. Lack of infrastructure capacity, including pipelines to transport the natural gas, can also lead companies to flare natural gas.

After more than a week, gas is still leaking on the North Slope, ConocoPhillips says - Ten days after a natural gas leak was discovered at its Alpine oil development on Alaska’s North Slope, ConocoPhillips is still trying to identify the exact source and says it’s warming up a drilling rig that it could use to pinpoint it. Officials from the company, along with leaders of the North Slope Borough and the local Native village corporation, continue to reassure residents of the neighboring village of Nuiqsut that the leak at Alpine, roughly 8 miles away, poses no threat to public safety. And Conoco says the ongoing gas release has diminished to “below detectable levels” at the pad, CD-1, where it was first discovered. But the village’s mayor, in a phone interview Monday, said she’s frustrated that the company ended daily calls with her this week and stopped taking live questions during its briefings for residents — instead referring them to a new company-sponsored website and hotline. “The company ended direct communication with the community,” said the mayor, Rosemary Ahtuangaruak, who’s also fought against Conoco’s projects in court. “We have no ability to ask questions.” In a brief phone interview Monday, spokeswoman Rebecca Boys said the company takes the concerns of Nuiqsut’s residents “very seriously,” and is committed to providing “periodic updates to both the mayor of Nuiqsut and the community as we have new information.” “The overall context of the entire thing is: There’s no injuries. There’s no impact to the tundra. There’s no impact to wildlife,” Boys said. “We want to make sure this community is safe. We want to make sure our workforce is safe, the surrounding community, the environment, all of that.” Boys said Conoco employees traveled to Nuiqsut early last week just to make sure people were getting their questions answered. The company’s liaison in the village is also offering tours of its air monitoring site in the community. Conoco, which owns and operates Alpine, says it has not detected any natural gas outside of the CD-1 pad, where oil production has since been shut off. The company first observed the gas at a specific well house — a kind of shack enclosing the top of the well — but it’s still not known whether that well, or what part of it, might be the source of the leak, Boys said. The gas is coming from underground, below gravel, she added. “Right now, we are investigating the source,” she said. Conoco has not explained how it thinks the leak began, what might have caused it or details of how the rig could be used to correct it — other than saying that the rig now being warmed up was drilling a wastewater injection well at the time the gas was first detected. [ConocoPhillips Alaska employees evacuated due to prolonged natural gas leak on the North Slope.] The company has also reported saltwater flowing out of three well houses at CD-1 — shack-like enclosures covering the tops of the wells — estimated at 600 gallons, according to a report filed with the state Department of Environmental Conservation.

Venezuela could add 400,000 bpd to oil output if US approves licenses - Venezuela's oil output could rise by at least 400,000 barrels per day (bpd) if the United States authorizes requests by state-run PDVSA's partners to trade Venezuelan crude, the country's petroleum chamber said on Friday. The increase would allow the OPEC member's oil production, which in January averaged 755,000 bpd according to official figures, approach some 1.2 million bpd, said the president of Venezuela's Petroleum Chamber, Reinaldo Quintero. U.S. officials met Venezuelan President Nicolas Maduro last weekend and demanded the country supply at least a portion of oil exports to the United States as part of any agreement to ease oil trading sanctions imposed on the country since 2019. "With the capacity we have, we can add 400,000 bpd", Quintero said in a press conference. The move could first benefit companies like Chevron Corp (CVX.N) that have pushed for authorizations and revamped licenses to trade or swap Venezuelan oil. In 2021, the country halted a free fall in its oil production and exports to reach 636,000 bpd of output, a 12 percent increase from the previous year. Even if oil sanctions on Venezuela are eased only for certain transactions, the country could ultimately add one million bpd of production, depending on capital injections allowed and trust by the parties in the dialogue, he said. Experts have been less optimistic on the forecasts, as an urgent need for drilling rigs and massive capital is putting a ceiling on any increase of production, which is reaching capacity. Years of underinvestment, mismanagement and, more recently, U.S. sanctions on PDVSA have hit Venezuela's oil production, which in the late 90s reached some 3.7 million bpd.

Shell among companies chasing Ecuadorian oil after Russia sanctions— U.S. refiners Valero Energy Corp and Marathon Petroleum Corp., along with Shell Plc’s trading unit Shell Western Supply and Trading, are rushing to secure Ecuadorian barrels after America banned imports of Russian crude. Ecuador’s state oil company EP Petroecuador held back-to-back meetings this week in Louisiana with several refiners and trading houses, according to Petroecuador’s oil trading manager, Pablo Noboa. Fuelmakers and trading companies are seeking to plug a supply gap in an already tight market, sparking a hunt to replace the Russian barrels. Oil prices have been swinging wildly on mounting concerns over the Russian invasion of Ukraine. Brent futures are trading at about $100 after surging to a 14-year high earlier this month. The ban on Russian oil includes straight-run fuel oil, a feedstock used to replace heavy crude that’s similar to what Ecuador produces. “U.S. refiners and traders are eager to sign mid- and long-term supply contracts after Russia invaded Ukraine,” Noboa said in an interview in New Orleans. “When oil in the global market is scarce, it makes sense to try to secure a steady supply.” The prospect of U.S. restrictions on Russian crude had refiners in Texas asking suppliers in Mexico and Brazil about long-term availability and prices even before the invasion of Ukraine. Brazil, which typically supplies fuel oil to Singapore and Europe, sold one cargo to the U.S. Gulf Coast in February. Marathon, the largest U.S. fuelmaker, is seeking 11 to 22 cargoes of Ecuadorian heavy sour oil over 11 months, starting as soon as June, Noboa said. Jamaica’s state-owned oil company Petrojam Ltd is looking for a similar arrangement for 11 cargoes and Shell Western is seeking to extend an existing 3-year supply contract that expires in December 2023. Marathon and Valero didn’t immediately return emails seeking comment. Shell is willing to pay more for the oil as long as it can load from Ecuador’s OCP terminal that handles larger vessels, he said. Valero is also seeking to secure a supply contract. Shell declined to comment. Since the invasion of Ukraine, Petrojam has been reaching out to countries including Guyana and Argentina, to secure additional supplies of crude oil and fuels. It’s talking to Nigerian National Petroleum Corp. about supplying 4 million barrels of crude annually, and is “currently in dialogue with Petroecuador and Ecopetrol in Colombia to establish term supply agreements,” General Manager Winston Watson said in a statement. Ecuador, a former OPEC member, plans to boost oil production amid rising crude prices. “It’s now or never, we won’t have this window of opportunity of good prices” again, Petroecuador chief Italo Cedeno said late Tuesday in an online presentation. With the help of the private sector, the company plans to increase production by more than half in four years, to 763,000 barrels a day. Petroecuador expects to sell the oil at market prices. The company is seeking to avoid repeating an earlier mistake, involving oil-backed loans with Asian companies that eventually led to millions of dollars of losses for the country, Noboa said. Ecuador is currently renegotiating the oil loans with Asia in an effort to free more barrels to sell on the spot market.

Backed by Government, Argentina E&Ps Upping Natural Gas Production - Amid soaring prices for the import of liquefied natural gas (LNG) and a tight global energy market, Argentina’s efforts to increase natural gas output appear to be paying off. Buenos Aires-based generator and exploration and production (E&P) company Pampa Energía SA announced it would up its gas production by 60% this year. The plan is to hit 11.4 million cubic meters/day (Mm3/d) by this winter in the Southern Hemisphere, the company said.Production increases would come mainly from new capacity in Neuquén, home to most of the Vaca Muerta shale deposit. The company is developing 20 wells at the El Mangrullo field in Neuquén, and is also constructing a gas treatment plant.Argentina officials have been vocal about the rising cost of LNG, which is used to meet seasonal demand each winter. The market is even tighter since Russia’s invasion of Ukraine.Vaca Muerta has been said to be geologically comparable to the Eagle Ford Shale in South Texas. To try to jumpstart E&P development from the area, the current government under Alberto Fernández has held numerous natural gas purchase tenders. In a hydrocarbons promotion bill sent to congress in September, Argentina’s government also said natural gas would be an essential part of the country’s energy transition. The bill includes price stabilization mechanisms and guarantees that volumes produced for export will see preferential tax rates and access to capital markets.The government has also given the green light to a new Vaca Muerta gas pipeline. The $1.5 billion, 24 Mm3/d Néstor Kirchner pipeline is to run from Tratayen in Neuquén to Salliqueló in Buenos Aires province. Officials have said the pipeline would be in operation by winter 2023.

New North Sea gas field goes into production, boosting UK energy security - A new gas field found under the North Sea off East Anglia has this week produced its ‘first gas’ – and more such developments are on the way, according to IOG, an independent offshore exploration and production company. IOG said that gas from its Blythe well started flowing into the UK gas grid at the weekend, with a second, called Elgood, due to start producing gas within days. Both are part of its Saturn Banks project. The gas will flow into Bacton, on the Norfolk coast, and meet demand in the southeast and then the rest of the UK. The announcement today was welcomed by Offshore Energies UK (OEUK, which represents the UK offshore industry. It said the new field demonstrated the vital role of the UK Continental Shelf in supporting the nation’s energy security during the current global energy crisis – and during the planned transition to net zero by 2050 and beyond. IOG’s announcement coincided with Monday’s Downing Street meeting between Boris Johnson and leaders of the UK’s offshore oil and gas industry, called to discuss how the UK might reduce its reliance on Russian energy following the invasion of Ukraine. Saturn Banks also creates a new production hub in the Southern North Sea, allowing any further discoveries to be linked back to it by pipelines. Development of another field, Nailsworth, is expected to begin this year, and would produce gas towards the end of 2023. This milestone came less than 30 months after the final investment decision, despite technical challenges during the drilling phase.

Eni Declares Force Majeure After Oil Spill in Bayelsa | Business Post Nigeria - Eni, the parent company of Nigerian Agip Oil Company (NAOC), has declared a force majeure on expected oil output at its Brass terminal in Yenagoa. This means a shortfall of 25,000 barrels of crude oil and 13 million standard cubic metres of gas per day from the terminal. A force majeure is a legal clause in contracts that absolves firms from legal liabilities due to circumstances beyond their control. “An incident occurred on the Ogoda/Brass 24 oil line at Okparatubo in Nembe Local Government Area of Bayelsa. The incident was caused by a blast, consequently causing a spill. “All wells connected to that pipeline were immediately shut whilst river booms and containment barges were mobilised to reduce the impact of the spill. “Regulators for inspection visit and repair teams have also been activated. The Federal Government, Bayelsa and security authorities were notified,” Eni said in a statement. The blast, which occurred a couple of days ago resulted from an attack on the facility, Eni stated. It was the second attack in the last three weeks after a similar incident on February 28 at Eni’s Obama flow station. The Obama incident led to a production shortfall of 5,000 barrels of crude oil per day. “Force Majeure has been declared at Brass terminal, Bonny NLNG and Okpai Power Plant,’’ Eni stressed. The National Oil Spills Detection and Response Agency (NOSDRA) confirmed that Joint Investigative Visits on the two incidents had been conducted. It said that field officers assigned to the visits had not filed their reports, however. Equally, the Shell Petroleum Development Company of Nigeria, SPDC – a local subsidiary of Shell Plc, on Monday declared force majeure on Bonny Light crude oil exports on Monday. These disruptions mean Nigeria will not be able to meet up to expectations for its crude production for March under the agreement with the Organisation of the Petroleum Exporting Countries and allies known collectively as OPEC+.

Shell, Eni declare force majeure on two large Nigerian oil flows— Shell Plc and Eni SpA both declared force majeure on key oil flows from Nigeria, threatening to disrupt supplies in a market that’s already fretting about the impact of Russia’s invasion of Ukraine. Shell’s measure has been in place since March 3 and applies to its Bonny export program. Eni’s relates to Brass crude cargoes and follows a pipeline blast in the Bayelsa state. Force majeure is a legal step that allows companies not to meet contractual obligations for reasons that are out of their control. Shipments of the two grades had been planned at a rate of 170,000 barrels a day next month but have been in a state of decline over the past few years, according to loading programs seen by Bloomberg. Flows back in 2020 were planned at about 320,000 barrels a day. A force majeure doesn’t necessarily mean the entirety of supply will be lost for a given period of time. Stored cargoes could still be shipped and repairs would allow shipments to resume. The market is closely watching what will happen to Russian oil supply in the wake of the country’s invasion of Ukraine. Some oil companies have stopped buying new cargoes from Moscow and some governments have announced that they are imposing bans on petroleum imports from Russia. Shell has said it will try to go elsewhere for barrels. The lost shipments could be significant for Nigeria. The country was scheduled to export almost 1.5 million barrels a day this month, loading plans show. It wasn’t clear when Eni’s force majeure began. The company said that Nigeria LNG is also affected by its measure.

Setback for Shell in $1.95bn debt appeal as Egbalor community wins Round One – Shell, which is contesting a judgement debt of N800 billion (or $1.95 billion) awarded the Egbalor, Ebubu community in Eleme Local Government Area of Rivers State over environmental destruction that occurred as a result of an oil spill, ran into some setbacks on Friday at the Appeal Court Owerri Division as three justices that sat on its appeal found against it in the interlocutory applications brought ahead of the main appeal it has filed to upturn the lower court’s judgement. Indeed, plans by the international oil company to sell some assets in Nigeria are now on hold as the justices ruled that Shell must deposit the said judgement sum of N800 billion with the court within 48 hours without which it must not carry out any assets sale. In a unanimous decision, the three justices of the Court of Appeal Owerri Division who are taking the appeal, specifically ruled and ordered as follows: That the international oil giant, Shell, is restrained from disposing of any of its assets in Nigeria pending the satisfaction of the judgement debt in favour of the Egbalor Community; Shell is ordered to pay the entire judgement debt of N800 billion plus accrued interest from the date of Judgement of the Federal High Court on 20/11/2020 into an interest yielding escrow account controlled by the Court of Appeal within 48 hours of the ruling! The judgement on Friday was the outcome of arguments heard last month over key applications before the main appeal. Four significant applications had been argued before the justices, one of which came from Shell and three from the lawyers to the Egbalor Community. The applications are Shell’s presentation of an application for stay of execution of the judgement pending appeal; while the community’s lawyers presented the following applications for the justices to consider: A motion by the community’s lawyers, Ndarani (SAN) & Co., asking the Court of Appeal, Owerri Division to order Shell to pay the judgement debt of N800 billion (about $2 billion) with interest at 2% per annum from the date of the judgement on 27th November 2020 into court pending the outcome of the appeal proceedings; An application to set aside Shell’s Notice of Appeal on the ground that it is incurably defective on points of law; An application for an order of the Court of Appeal to halt any sale of Shell’s assets in Nigeria, pending the outcome of the Court proceedings in this case and/or final satisfaction of the judgement debt by Shell Nigeria and its parent companies, Shell International Limited and Shell Exploration & Production B.V. Last month, all the pending motions had been vigorously moved and fully argued, with the court refusing to take Shell’s motion for stay of execution of the judgement pending appeal, opting instead for accelerated hearing of the substantive appeal.

Reps Probe Oil Spills Petition Against Addax Petroleum, Aiteo | Business Post Nigeria -- The House of Representatives has commenced investigation into the alleged involvement of Addax Petroleum Nigeria Limited and Aiteo Eastern Exploration and Production Company in oil spills in Rivers State. Business Post had reported that three Kalabari Local Government Areas of Degema, Asari-Toru and Akuku-Toru of the state had petitioned the two oil firms over their activities in Rivers State. The petition was laid on the floor of the House of Representatives by the member representing Degema/Bonny Federal Constituency, Mr Farah Dagogo. The Amanyanabo of Kalabari, Professor T.J.T Princewill, accused Addax Petroleum Nigeria Limited of “brazen disregard and disrespect to Kalabari people” with its activities in OML126 and OML137 oil fields. The monarch in the petition explained that Addax has refused to enter into a Memorandum of Understanding with the host communities. It warned of a likely breakdown of law and order in the said oil fields, explaining that the oil exploration activities by Addax have continued to threaten their source of livelihood and the kingdom as a whole. “We have done everything humanly possible as law-abiding citizens to make Addax Petroleum Nigeria Limited see reasons and execute a Memorandum of Understanding with the Kalabari Kingdom as a way of ensuring a peaceful working environment of mutual benefits to all but will appear that Addax Petroleum Nigeria will have none of it, and has gone ahead to disrespect Amanyanabo and Natural Ruler of Kalabari Kingdom,” a part of the petition read. Similarly, the Kalabari Frontiers wants the House of Reps to mandate Aiteo to provide relief materials to the Kalabari Communities affected by their outrageous crude oil spill in well 1, OML 29, Santa Barbara Oil Field. The petition signed by the parties – Alabo Fiala Okoye-Davies, Chief Fiala Tuboalabo Fiala, Chief Flag Amakiri, Mr Japusoibina Ekine, and Ibimina Victor Osoma, also requested for effective remediation plan be put in place for mitigation of the polluted region in line with global best practices, international standards and technical expertise’ “Compensation, water rights and individual claims be made payable to thousands of those economically displaced,” the petition further stated.In his reaction, the Speaker of the House of Representatives, Mr Femi Gbajabiamila, directed the House Committee on Petitions to investigate the allegations and revert to the House.

ExxonMobil defends purchase of Russia-loaded Kazakh crude on US sanctions guidance --ExxonMobil defended March 11 its purchase of a tanker of Kazakhstan’s CPC crude oil being delivered to the UK’s Fawley refinery from the Russian port of Novorossiisk, saying Kazakh crude was excluded from US sanctions targeting Moscow. Following protests against the delivery by environmental group Greenpeace, ExxonMobil said the crude, derived from oil fields in Kazakhstan in which the US major is a shareholder, was free of any Russian oil that also uses the pipeline to the Black Sea port, making it permissible for purchase under new US Treasury Department guidance on sanctions. It comes as the UK has moved to block Russian shipping and phase out Russian energy imports in response to the invasion of Ukraine. “No ExxonMobil equity crude that is transported via the Caspian pipeline en route to the US or Europe is from Russia,” ExxonMobil said in emailed comments, adding: “The Caspian pipeline delivers oil and gas from Kazakhstan and is not subject to sanctions at this time.” Kazakhstan’s flagship CPC crude oil — a light, relatively low-sulfur blend and a major export earner for the country — has traded at a steep discount in the spot market since Russia’s invasion of Ukraine and consequent sanctions against Moscow, due to the crude being loaded in Russia, and heightened shipping risk in the Black Sea. However, Kazakhstan is not a party to the conflict in Ukraine and major oil and gas companies that have stakes in Kazakh production have continued to ship the crude across southern Russia through the CPC pipeline, which is the Central Asian country’s main route to global markets, accounting for nearly 80% of Kazakh oil exports. Total CPC shipment volumes were over 1.5 million b/d in February, with about 90% coming from Kazakhstan, but the remainder from Russian fields in the north Caspian operated by Lukoil. Several international oil companies including ExxonMobil hold stakes in the pipeline with Russian partners such as Lukoil and state-owned Rosneft, alongside their investments in Kazakh fields such as Tengiz and Kashagan. However, on March 8 the US Treasury Department issued guidance confirming Kazakh crude is not subject to sanctions despite its reliance on the route, highlighting systems that “segregate” Russian from Kazakh crude.

New Zealand's oil output at 15-year low in 2021 -New Zealand's oil output dropped to a 15-year low last year largely because of the decline in output from the Pohokura field offshore the west coast of the country's north island. The Pohokura field together with the Maari field have contested as New Zealand's largest oil field, according to the latest official data. New Zealand's production of crude oil, condensate, naphtha and natural gas liquids (NGL) dropped to an average of 23,500 b/d in calendar 2021, down by 12pc from the 26,800 b/d produced in 2020, and the lowest average daily since the 18,700 b/d produced in 2006, according to latest energy quarterly data from New Zealand's Ministry of Business, Innovation and Employment (MBIE). The slide in New Zealand's crude output reflected the 37pc drop in output from the Pohokura field — which is operated by Austrian independent OMV — to an average of 3,100 b/d in 2021, from 4,900 b/d in 2020. It also marked a 15-year low in output from the field, MBIE data show. New Zealand is reliant on crude imports for feedstock for its only refinery, the 135,000 b/d Marsden Point plant, which is due to close at the end of the month and be converted into an oil product import terminal. The country will subsequently be entirely reliant on oil product imports to meet fuel demand, and will therefore reduce crude imports. Crude imports averaged 64,800 b/d in calendar 2021, down by 16pc from 76,700 b/d in 2020, and lower by 38pc from 105,000 b/d imported in 2019, MBIE data show. Total crude and petroleum product imports fell by almost 8pc to 129,900 b/d in 2021 from 140,500 b/d in 2020, and were lower by 21pc from 165,000 b/d imported in 2019. The decline in imports largely reflects the weaker demand for jet fuel and road transport fuel as New Zealand imposed tight restrictions on air travel and implemented city lockdowns in an effort to combat the spread of Covid-19.

The World Could See A Record-Breaking Oil Supply Shock - The global oil market could lose 3 million barrels per day (bpd) of supply from Russia starting in April, as sanctions on banks and buyers’ reluctance to purchase Russian oil could result in the biggest oil supply crisis in decades, the International Energy Agency (IEA) said in its Oil Market Reportfor this month.Since Russia invaded Ukraine at the end of February, the United States has banned imports of Russian energy while the UK is working to phase out its Russian supply by the end of the year. Even though Europe has not sanctioned Russian oil and gas, a growing number of European buyers are joining the wave of condemnation of Russia’s war and pledge not to buy its oil. As of last week, as much as 66 percent of Russian seaborne spot cargoes were struggling to find a buyer, according to estimates from J.P. Morgan Global Research.The Russian invasion of Ukraine came at a time when the oil market was already tightening, with inventories in OECD economies already drawn down to well below the five-year average and sitting at their lowest levels in eight years.The immediate solution that could help offset the loss of Russian oil supply lies in the two most influential members of OPEC, which, together with Russia, have been managing supply to the market in the form of the OPEC+ agreement for several years now.However, OPEC’s Saudi Arabia and the United Arab Emirates (UAE) – the only two producers believed to have enough spare capacity to ramp up production in the short term – have not stepped forward to fill in the widening gap that buyers’ “self-sanctioning” of Russian oil is leaving. The UAE confused the oil market last week with somewhat contradictory messages that it backs additional increases in OPEC+, but energy minister Suhail al Mazrouei later reaffirmed that the UAE would stick to the plan of gradual production increases.“The OPEC+ alliance agreed on 2 March to stick with a modest, scheduled output rise of 400 kb/d for April, insisting no supply shortage exists. Saudi Arabia and the UAE – the only producers with substantial spare capacity – are, so far, showing no willingness to tap into their reserves,” the IEA said in its report.On the other hand, if the Saudis and the UAE were to tap into their reserves, the global spare capacity—largely in their hands—would be so thin that a turn for the worse in the Russian oil supply, or another outage in Libya, would leave global oil producers with such a small cushion that a price spike would be certain to follow.So why isn’t U.S. shale pumping more, especially with the “blessing” of the White House and Secretary of Energy Jennifer Granholm, who urgedAmerican producers “to responsibly increase short-term supply where we can right now to stabilize the market and to minimize harm to American families.Producers have said why for months: there is a time lag between drilling and first oil, also because of years of underinvestment, capital discipline, discouraging federal policies toward the oil industry, and supply chain bottlenecks.For example, even if ConocoPhillips decided to pump more oil today, the first drop of new oil would come within eight to 12 months, CEO Ryan Lance told CNBC last week. “Even if shale production responds to the price signal, it cannot grow by more than 1.4 mbd this year given labor and infrastructure constraints,” J.P. Morgan said this week. Then there is the prospect of additional barrels from Iran, but they “could be months off,” the IEA said, adding that the Islamic Republic could ramp up exports by around 1 million bpd over a six-month period when—and if—a deal is reached.

The World Is Facing A Critical Diesel Shortage - Yves here. I have regularly been mentioning a US diesel shortage as a real risk if the Russian sanctions aren’t relaxed soon in private discussions and should have Said Something on the blog. This post depicts the issue as much broader.However, it does not unpack the technical issue at all and yours truly will take a stab. This is a layperson/simplified version, so if I got anything wrong, please pipe up in comments. Additional details also welcome.This is a very simplified view of how petroleum distillation works:Notice the ordering from top to bottom. The “lighter” products have shorter carbon chains. That means less energy per unit volume. So diesel is more energy dense than gasoline. But this simple picture ignores that crude oil is most assuredly not created equal. Light sweet crude, the sort that comes from Saudi Arabia, is very much skewed towards the gasoline end of the spectrum when refined. Shale gas is even lighter. By contrast, Iran and Venezuela produce what is called heavy, sour crude.Refiners can change some of these “fractions” to others, as ACEA explains:

  • cracking, which breaking large hydrocarbon chains into smaller ones
  • unification – which combines smaller hydrocarbon chains to make larger ones
  • alteration – which re-arranges various isomers to make desired hydrocarbons

However, this process is not cost free. For instance, I have regularly read that oil from Iran and Venezuela are attractive on world markets only at prices of over $100 a barrel. I take that to mean only when prevailing prices are high is it worth the cost and effort to crack them to produce gasoline. My understanding is that Russia oil is heavy but not as heavy as Venezuela’s or Iran’s crude, that its energy density is very well suited for home heating oil, and as the article below suggests, diesel. Diesel is important for Europe since many passenger cars as well as trucks use diesel. In addition, I assume (and welcome reader input) that getting diesel from light sweet crude by unification is mighty inefficient, otherwise coming up with more diesel would not be such a big problem. And as for Venezuela, experts have opined that due to years of sanctions-induced underinvestment, Venezuela can’t produce enough to fill America’s Russia shortfall. Plus the US is unable to get over itself. From the Financial Times at the start of the week:The White House this month sent three top officials to talk to Maduro, even though the US does not recognise him as president and has indicted him as a drug trafficker with a $15mn price on his head. The US government acknowledged last week that one aim was “certainly” to discuss energy security following Russia’s invasion of Ukraine.The visit — the first by a White House official to Caracas since the 1990s — prompted a fierce backlash at home, not only from Republican hawks like Florida senator Marco Rubio but also Bob Menendez, the Democratic head of the Senate foreign relations committee…..But no groundwork was laid in the US so the whole thing went pear shaped.Now to the OilPrice story.

The World Is Facing A Critical Diesel Shortage - A crude oil shortage is invariably bad news for those that consume oil products. But when it comes to these products, a diesel shortage has the potential to be even more devastating than a crude shortage. Reuters’ Rowena Edwards reported in early February that the supply tightness in crude oil, gas, and coal was beginning to spread to oil products, most notably middle distillates, the most popular among which is diesel fuel.The fuel, whose biggest market is freight transport, got hit severely during the pandemic lockdowns as transport rates declined. After the end of the lockdowns, however, as economies began to recover from the worst of the pandemic, transport picked up, and diesel fuel demand jumped. Yet production still has to catch up.Reuters’ John Kemp reported this week that diesel fuel stocks in Europe are at their lowest since 2008, and 8 percent—or 35 million barrels—lower than the five-year average for this time of the year.In the United States, the situation is graver still. There, diesel fuel inventories are 21 percent lower than the pre-pandemic five-year seasonal average, which translates into 30 million barrels.In Singapore, a global energy trade hub, diesel fuel inventories are 4 million barrels below the seasonal five-year average from before the pandemic.What is perhaps worse, however, is that over the past 12 months, the combined diesel fuel inventories in the U.S., Europe, and Singapore, have shed a combined 110 million barrels that have yet to be replaced, Kemp noted.On top of all this, Russia is a major supplier of diesel, meaning Western sanctions for its invasion of Ukraine are affecting these supplies too. With the market increasingly tight, Shell and BP have shied away from offering any diesel fuel cargos on the German market for two weeks, Reuters reported last week, for fear of shortages.In the UK, meanwhile, the Daily Mail cited analysts as warning that the government may need to resort to diesel fuel rationing from next month because of the state of the market and the ban on Russian oil imports, which include diesel fuel. Russia supplied a third of the UK’s imported diesel before the ban.“Risks of energy rationing and ultimately a recession are growing by the day – something most policymakers seem to be ignoring or not grasping right now.‘If Russian oil is not integrated back i nto the market within the next few weeks, we are at a real risk of having to ration crude and products by the summer,” the Daily Mail report quoted an unnamed spokesman for consultancy Energy Aspects as saying.

Iranian company to build 113,000-ton oil tanker for NITC | Hellenic Shipping News -Offshore Industries Complex (ISOICO) and the official deal on this due will be signed soon, NITC Public Relations and International Affairs Department reported. Shiva said his company has awarded the mentioned project to a domestic firm in line with the emphasis of the Leader of the Islamic Revolution Seyed Ali Khamenei and the realization of the current year’s motto which is “Production: Support and the Elimination of Obstacles”. “At the request of the National Iranian Tanker Company, the vessel will be the first domestically built dual-fuel oil tanker to run on liquefied natural gas (LNG) and low-sulfur Mazut,” he explained. The Aframax tanker, which is environment-friendly and will be designed and built according to the latest standards of the International Maritime Organization (IMO), will also be in full compliance with phase three of the Energy Efficiency Design Index (EEDI), according to the NITC head. Shiva stated that the construction of this tanker inside the country is going to create job opportunities for several thousand people and will lead to the development of the country’s shipbuilding and other related industries. He also mentioned his company’s determination for conducting the overhaul operations of the company’s fleet inside the country and specified: “So far, the repairs of 24 tankers and submarines have been entrusted to domestic companies, which is aimed at supporting domestic industries and creating jobs in the country.” The official further noted that NITC is also supplying the necessary materials for the mentioned projects including paints, oils, and chemical products from domestic sectors, which has also saved the country a significant amount of money. The performance of the National Iranian Tanker Company and round-the-clock efforts of the sailors of the company’s fleet in transporting oil and oil products have been in the center of attention of the country’s authorities these days, as it has been appreciated by the oil minister and also welcomed by other members of the cabinet.

Iraq's oil supply compatible with global demand: statement (Xinhua) -- Iraq said on Wednesday that its crude oil exports are in line with the consumption in the world oil market, ruling out the need to increase oil production. A statement by the Iraqi State Organization for Marketing of Oil (SOMO) said with "the developments and changes that the global market is going through today, especially with regard to the balance of global supply and demand for crude oil, Iraq believes that the level of oil exports supplied to the global market is commensurate with the level of global consumption and demand." The statement stressed that the planned increases by the OPEC+ countries are sufficient to address any shortages that may occur in the crude oil supplies to the world markets. SOMO's statement came as the crude oil prices in the world market witnessed a significant increase because of the Russian-Ukrainian crisis and the sanctions imposed on Russia. Earlier in the month, the Ministry of Oil said Iraq exported 92.79 million barrels of crude oil in February with an average of 3.31 million barrels per day. Iraq used to export more than 100 million barrels per month with higher revenues, but the OPEC+'s agreement to cut oil production and a dip in oil prices because of the COVID-19 pandemic have combined to weaken the country's oil exports. Iraq's economy heavily relies on crude oil export, which accounts for more than 90 percent of the country's revenues. Japan to call on Middle East oil producers to raise output - Japan will ask oil producing countries in the Middle East to ramp up production in the face of surging prices triggered by Russia’s invasion of Ukraine, Prime Minister Fumio Kishida said March 13. “I am ready to lead diplomatic efforts myself to secure supplies from oil producers in the Middle East with whom Japan has maintained steady ties with regard to natural resources,” Kishida said at a meeting of his Liberal Democratic Party in Tokyo. He also said the government will provide subsidies to oil distributors to prevent the national average of gas prices from rising above the current level of 172 yen ($1.48) per liter. The subsidies were raised to 17.7 yen per liter on March 10, up from 5 yen per liter before. Kishida also said the government will diversify energy sources and their suppliers to help Japan become more resilient in energy crises. But he reiterated that the government will not join the United States and some European countries in imposing sanctions against Russia hitting Russia’s energy sector. “We stand firm against Russia’s aggression, but we also need to protect Japan’s national interests in securing energy supplies,” he said. The United States has banned imports of crude oil, natural gas and coal from Russia, expanding an array of punitive measures to cover the energy sector, which forms the core of the Russian economy. Japan relies on Russia for about 8 percent of its natural gas needs and about 4 percent of its crude oil needs.

Saudi Aramco awards Schlumberger gas drilling project - Schlumberger announced a major contract award by Saudi Aramco for integrated drilling and well construction services in a gas drilling project. The integrated project scope encompasses drilling rigs and technologies and services, including drill bits, measurement while drilling (MWD) and logging while drilling (LWD), drilling fluids, cementing, and completing wells. Schlumberger will leverage digital solutions to enhance integrated drilling performance, including the DrillOps* on-target well delivery solution which uses data analysis, learning systems and automation to execute a digital well plan, improving drilling efficiency, consistency and performance. “This contract award represents the continuation of an ongoing collaboration with Saudi Aramco,” said Tarek Rizk, MENA president, Schlumberger. “Through our committed teams, differentiated technology, and integrated drilling and well construction services we will work closely with Saudi Aramco on well delivery and set a new performance benchmark.” This award represents a significant endorsement of Schlumberger’s fit-for-basin technology and domain expertise for gas well development in the region.

Again, Crude Oil Production by OPEC, Allies Falls by 890,000 bpd – Despite the decision of the Organisation of Petroleum Exporting Countries (OPEC) and its allies, OPEC+, to raise crude oil production by 340,000 barrels per day last month, the gap between the group’s actual output and target still widened to 890,000 bpd, according to the cartel’s report. It was also a month that saw Nigeria raise output to 1.51 million bpd, a marked improvement from the previous few months when the country struggled to produce between 1.2 million bpd and 1.4 bpd. Nigeria has been constrained in meeting its OPEC allocation for months, and as of January had as much as 300,000 barrels per day deficit, mainly due to ageing upstream infrastructure and sabotage as well as technical reasons.Despite the over 1.7 million barrels per day output allowed by OPEC+, the country had managed to increase production to about 1.4 million, the highest in recent times, going by the latest OPEC review. Although there are issues surrounding the sustainability of the current upward trend of the country’s supply to the global market, it is seen as a good sign for the nation’s oil and gas industry. The latest report showed that production from OPEC+ participants was 38.25 million bpd in February, up from 37.91 million bpd in January, but below the target of 39.14 million, according to an Argus survey, which shares insights and analyses about energy and commodity markets worldwide. The latest report indicated that notably, the quota-exempt OPEC members, Iran and Libya raised output by a combined 170,000 bpd in February, with the north African country accounting for 130,000 bpd of this after an early-January restart of four crude and condensate fields. But 14 of the wider group’s 19 members, including Nigeria, produced below quota in the month, as dwindling spare capacity, underinvestment and infrastructure restraints have constrained output increases. The OPEC+ group’s stance on rising prices is that they are down to geopolitics and not market fundamentals, with the organisation’s Secretary-General, Mr Sanusi Barkindo, saying during the week that “we have no control over current events.” Barkindo stated that despite the surging crude oil prices, there’s no shortage of the commodity in the market, although he admitted that not all member countries are currently able to fulfil their obligations because of capacity constraints.OPEC+ ministers will meet on March 31, to decide a production strategy for May, when five countries — Russia, Saudi Arabia, Iraq, Kuwait and the UAE — will see upwards revisions to the baseline levels that determine their quotas and compliance. This would see the combined monthly output quota increase move to 432,000 bpd from 400,000 bpd, which could go some way to satisfying calls for the group to raise the pace of production increases. Minister of State Petroleum, Mr Timipre Sylva, last week said that the absence of long-term investment in the oil and gas sector, as well as insecurity, should be blamed on Nigeria’s current low crude oil production. Sylva stated that this development was responsible for the inability of Nigeria to meet the OPEC quota in recent times in addition to the speed with which International Oil Companies (IOCs) and other investors were withdrawing investments in hydrocarbon exploitation.Emmanuel Addeh in Abuja

Ukraine war threatens oil demand and investment, OPEC says — Russia’s invasion of Ukraine threatens to intensify the surge in global inflation, hurting oil demand and investment, the Organization of Petroleum Exporting Countries warned. International crude prices briefly hit a 13-year high of almost $140 a barrel last week as a boycott of Russian supplies deepened the shortfall in already tight world markets. Brent futures have since retreated by almost 30%, but fears persist over the danger of a long-term loss of exports from Russia, which is part of the OPEC+ coalition. “This conflict has so far led to a number of issues, including rising commodity prices, which are further escalating global inflation,” OPEC said in its monthly report. “The effects of the conflict and especially the impact of rising inflation, if sustained, will lead to a decline in consumption and investments to varying degrees.” Growing inflation is proving a major challenge for the world economy, and inflicting a cost-of-living crisis in many countries, as supplies of raw materials fail to keep pace with the post-pandemic recovery in consumption -- and face further constraints from the war unleashed in Ukraine. OPEC’s de facto leader Saudi Arabia has so far rebuffed U.S. pressure to fill the gap left by Russia by opening the taps, partly out of reluctance to harm its political partnership with Moscow, and partly from a belief that oil markets remain adequately supplied despite the turmoil. Still, with major oil companies deserting Russia and international condemnation getting louder, the pressure on OPEC+ members to pick a side may eventually become irresistible. The very acknowledgment of the war -- even in careful terms that avoided the word “invasion” -- is an unusual step for the group’s monthly report, which typically side-steps any controversies involving OPEC+ members. The 23-nation alliance next meets on March 31. The report backs up Riyadh’s view that OPEC is producing enough to keep markets broadly balanced. Its 13 members boosted output by 440,000 barrels a day to 28.47 million a day in February -- bringing the average for the year so far to 28.25 million a day, or a little above the average required this quarter.

Hedge funds slash oil positions amid extreme volatility: Kemp -- Investors slashed bullish bets on oil last week as prices surged to multi-year highs, the economic outlook deteriorated, and extreme volatility made derivatives positions more expensive to maintain. Hedge funds and other money managers sold the equivalent of 142 million barrels in the six most important petroleum-related futures and options contracts in the week to March 8. Last week’s sales were the 11th largest out of 469 weeks since March 2013, according to records published by ICE Futures Europe and the U.S. Commodity Futures Trading Commission. Portfolio managers sold Brent (-97 million barrels), European gas oil (-23 million), U.S. gasoline (-13 million) and U.S. diesel (-11 million) and were buyers only of NYMEX and ICE WTI (+2 million). The selling was dominated by closure of existing bullish long positions (-114 million barrels) rather than initiation of new bearish short ones (+28 million), consistent with a risk-reducing strategy. Funds ended up with a net position in the six contracts of just 588 million barrels (45th percentile for all weeks since 2013) down from a recent peak of 761 million barrels (70th percentile) on Jan. 18. Bullish long positions outnumbered bearish short ones by a ratio of 4.76:1 (61st percentile) down from 6.24 (80th percentile) in mid-January (https://tmsnrt.rs/3tXSCsU). In recent weeks, the record backwardation in futures prices, accelerating rise in spot prices, and increasing day-to-day volatility have been signs of a market under extreme stress and likely to reverse course. Soaring oil prices have been part of a broader increase in the price of raw materials, manufactured items and freight charges which has raised the probability of a recession within the next 12 months. Reflecting the deteriorating economic outlook and volatility costs, distillate positions were cut to 85 million barrels (67th percentile) last week down from a recent peak of 144 million barrels (85th percentile) five weeks earlier. Rising volatility is also a symptom of a market becoming less liquid, with both bullish and bearish investors less willing to take on new risk exposures and instead reducing positions until trading becomes calmer. Heightened volatility has fed through into more demands for margin from brokers and clearing houses and makes futures and options positions increasingly expensive to maintain, encouraging fund managers to trim positions. Extreme volatility and rapidly diminishing liquidity is reminiscent of trading conditions in the second quarter of 2008 as oil prices climbed towards a record high in the first half of July before plunging. Oil prices are caught between rising supply risks as a result of Russia’s invasion of Ukraine and the consequent sanctions on the country’s output, and growing demand risks stemming from inflation and a possible recession. In this increasingly unstable and chaotic situation, many hedge fund managers have decided it is prudent to realise profits from previous bullish positions and reduce risk exposure until the balance of risks becomes clearer.

Oil Slides as China, India Scoop Up Russian Oil Exports -- Oil futures registered steep losses Monday afternoon, briefly sending the U.S. crude benchmark below $100 per barrel. The losses followed reports suggesting that China and India -- the world's first- and third-largest oil importers, are considering circumventing international sanctions slapped on Moscow in response for its aggression in Ukraine to purchase discounted Russian oil and commodities. India is said to be working on the mechanisms that would allow it to purchase cheaper oil from Russia using its national currency, the Rupee, according to sources familiar with negotiations. Last year, Russia's oil shipments to India averaged 43,400 barrels per day (bpd), a marginal amount when compared to the 4.8 million bpd in India's total oil demand. That might soon change. Bloomberg reported that the country's top refiner, IOC, bought 3 million barrels (bbl) of Russian Urals crude via tender for May delivery -- its first purchase of the grade since Russia invaded Ukraine on Feb. 24. Restricted financing and limited demand from Western buyers have forced Moscow to offer Asian buyers favorable terms to purchase its oil cargos. Cheaper Russian crude can help Indian consumers and businesses to weather a major inflationary shock from surging commodity prices. India, a major U.S. ally, has neither condemned the Russian invasion of Ukraine nor imposed sanctions. Just like India, China, Asia's largest economy, has not called Russia's military action against Ukraine an invasion and has abstained from a United Nation's Security Council vote condemning Russia. China is far more dependent on Russian oil and commodity trade than India. Oil traders are also closely monitoring a developing situation around a COVID-19 outbreak in China after health officials shut down the southern city of Shenzhen, a business hub of 17.5 million people, and restricted access to Shanghai by suspending transit services. China's coronavirus infections have risen exponentially in recent days, with cases concentrated in the country's large business and manufacturing centers, fueling concerns over a renewed hit to fuel demand. Authorities in China are enforcing a "zero COVID tolerance" policy and have locked down entire cities to find and isolate every infected person -- a strategy that has hindered economic recovery. . China's stock market took a heavy beating on Monday, with key indexes listed in Hong Kong plummeting more than 7% and wiping out $2.1 trillion in market value. At settlement, NYMEX April West Texas Intermediate fell $6.32 to $103.01 per bbl, and ICE Brent May contract plunged $5.77 to $106.90 per bbl. NYMEX April RBOB futures plummeted 14.32 cents to $3.1689 per gallon, and April ULSD futures slumped 14.13 cents to $3.2763 per gallon.

U.S. oil tumbles more than 8%, dips below $100 per barrel - U.S. oil tumbled more than 8% on Monday, breaking below $100 per barrel, amid talks between Russia and Ukraine as well as new Covid-19 lockdowns in China — which could dent demand. West Texas Intermediate crude futures, the U.S. oil benchmark, lost 8.75% to trade at $99.76 per barrel at the lows of the day. International benchmark Brent crude shed 8% to $103.68 per barrel. In afternoon trading some of the losses were recovered. WTI settled 5.78% lower at $103.01 per barrel, with Brent finishing the day at $106.90 per barrel, for a loss of 5.1%. Russia and Ukraine were slated to resume peace talks on Monday, while China's March demand is set to be revised lower due to new coronavirus lockdowns. Additionally, open interest in Brent futures has dropped, which means financial players are reducing risk. "Today's action reflects a shift in sentiment in Russia/Ukraine causing sentiment traders to sell, fundamental concerns around demand coming from China's Covid lockdowns causing fundamental traders to take profits, and technical pressure as crude breaks" key levels, said Babin. Monday's sell-off builds on last week's decline, which saw WTI and Brent register their worst week since November. Oil surged above $100 in late February as Russia invaded Ukraine, prompting fears that supply would be disrupted in what was already a tight market. It was the first time oil breached the triple-digit level since 2014. And the climb didn't stop there. WTI traded as high as $130.50 last week, with Brent almost reaching $140. The market has been whipsawing between gains and losses in what's been an especially volatile time for oil prices. The surge has sent the national average for a gallon of gas in the U.S. to the highest on record, unadjusted for inflation, which is adding to inflationary fears across the economy. Even with Monday's big decline both Brent and WTI are still up more than 30% for the year.

Oil Prices Fall on Hedge Funds Trimming Bullish Bets - Oil prices soared to stratospheric levels following fears of a potential supply crunch after Russia’s invasion of Ukraine. Now, prices are coming back down to earth as big players like hedge funds are starting to trim their bets. Hedge funds “slashed net-bullish Brent oil bets to their lowest levels on record,” noted Naeem Aslam, chief market analyst at AvaTrade. “The retreat demonstrates that significant swings in the oil market were part of a broad-based liquidation of positions, with speculators closing out long contracts in WTI, diesel, and gasoline futures.” The global landscape continues to change amid Russia’s invasion of Ukraine. Nations are looking to wean themselves off dependency on Russia for oil by looking to alternative sources of energy or working with other countries to shore up supply.Meanwhile, the world will remain fixated on the news coming out of Ukraine. If the two nations can successfully move to negotiation, this could help ease the current oil supply shock.Additionally, COVID cases are surging in China. This is causing supply chain disruptions that could also add to inflation worries.“The downside correction in oil prices is sure a relief when it comes to the inflation expectations, but the new lockdown measures [in China] will continue worsening the supply chain crisis and add on the inflation worries,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a note to clients.

Oil Drops After OPEC Warns Ukraine Crisis to Hit Oil Demand -- Oil futures nearest delivery declined for a second session on Tuesday, with U.S. and international crude benchmarks having lost more than 10% since the beginning of the week after Ukrainian officials signaled a ceasefire agreement with Russia could be reached as soon as next week amid signs of a stalled military campaign by the Russians, while growing fears over rising inflation, elevated commodity prices and strained supply chains soured sentiment in financial markets. In its Monthly Oil Market Report released Tuesday morning, the Organization of the Petroleum Exporting Countries (OPEC) warned the Russo-Ukrainian conflict would likely have a far-reaching effect on global demand growth, although the situation is too fluid to accurately attach numbers that define the expected magnitude of that impact. "Challenges to the global economy -- especially regarding the slowdown of economic growth, rising inflation and the ongoing geopolitical turmoil will impact oil demand in various regions," according to the report. Due to an unclear and rapidly changing situation in Ukraine, OPEC left its global oil demand growth forecast "under assessment" at 4.2 million barrels per day (bpd) for 2022, unchanged from the previous forecast, with the forecast for demand growth for countries that are part of the Organization for Economic Cooperation and Development at 1.9 million bpd and for non-OECD countries at 2.3 million bpd. On the supply side, OPEC estimates production from the 13-member cartel increased by 440,000 bpd in February to 28.473 million bpd, with 11 of the 13 country members of the cartel having lifted output last month. Despite the large monthly increase in OPEC production, the 10 country members that are part of the OPEC+ agreement underproduced their collective 24.808 million bpd quota by 668,000 bpd in February. In financial markets, the Federal Open Market Committee concludes its two-day policy meeting on Wednesday with consensus calling for the central bank to raise interest rates by 25 basis points. This would mark the first interest rate hike since the beginning of the pandemic. The oil complex came under the pressure on Tuesday after Oleksiy Arestovych, an adviser to Ukraine's President Volodymyr Zelensky, said a peace agreement with Russia could be established within one or two weeks at the earliest and by May the latest. Despite heavy shelling of heavily populated Ukrainian cities, the Russian army was unable to make real progress on the frontlines amid logistical issues, low morale and lack of basic items like food and fuel. There are unconfirmed reports of widespread hunger among the Russian troops. On the session, NYMEX April West Texas Intermediate fell $6.57 to $96.44 bbl, and ICE Brent May contract plunged $6.99 to $99.91 bbl. NYMEX April RBOB futures plummeted 17.08 cents or 6% to $2.9981 gallon, and April ULSD futures slumped 24.66 cents to $3.0297 gallon.

Oil drops again, now more than 25% below recent high - Oil registered heavy losses Tuesday, building on Monday's decline, as myriad factors weighed on sentiment, including talks between Russia and Ukraine, a potential slowdown in Chinese demand and unwinding of trades ahead of the Federal Reserve's expected rate hike on Wednesday. Both West Texas Intermediate crude, the U.S. oil benchmark, and global benchmark Brent crude settled below $100 per barrel Tuesday, a far cry from the more than $130 they fetched just over a week ago. WTI ended the day at $96.44, for a loss of 6.38%. During the session it traded as low as $93.53. Brent settled 6.54% lower at $99.91 per barrel, after trading as low as $97.44. WTI and Brent fell 5.78% and 5.12%, respectively, on Monday. "Growth concerns from the Ukraine-Russia stagflation wave, and FOMC hike this week, and hopes that progress will be made in Ukraine-Russia negotiations" are weighing on prices, said Jeffrey Halley, senior market analyst at Oanda. "It seems like the old adage that the best cure for high prices, is high prices, is as strong as ever," he added, noting that he believes the top is in for oil prices. Crude surged above $100 per barrel for the first time in years the day Russia invaded Ukraine, and prices continued to climb as the conflict intensified. WTI hit a high of $130.50 a barrel early last week, while Brent traded as high as $139.26 per barrel. Prices jumped as traders feared that Russia's energy exports would be disrupted. So far the U.S. and Canada have banned Russian energy imports, while the U.K. has said it will phase out imports from the country. But other nations in Europe, which are dependent on Russia's oil and gas, have not enacted similar moves. "It's really a market that traded entirely on fear," Rebecca Babin, senior energy trader at CIBC Private Wealth U.S., said of the initial spike higher amid supply fears. "Now, without a true change in the facts, we're trading on the hope" that things won't be as bad in the commodity market as initially feared. "We don't have a lot of clarity around what is really going to happen with crude supplies in the future as a result of this conflict," she added.

China's Covid resurgence is part of the reason oil prices plummeted from record highs -- China's recent Covid wave and subsequent lockdowns have helped oil prices ease from record highs reached roughly a week ago, according to analysts. "We have the re-emergence of Covid in China, which is throwing another spanner into the works when we're trying to assess what the demand will be," said Richard Gorry, managing director of JBC Energy Asia. He also said markets are still grappling with the disruption of oil supply caused by the Russia-Ukraine war. Oil prices have been volatile in recent sessions, spiking to record levels not seen since 2008 just a week ago, reaching above $130 per barrel. But crude prices then fell drastically, dropping more than 27% below that recent high to less than $100 a barrel earlier this week. "The OPEC in their monthly reports have not changed their demand forecast, which suggests that it is business as normal," Gorry said. "I would tend to believe that that will probably change in the months ahead, because if we look at China, for example, right now, we have 45 million people under lockdown, like it was in 2020. And we know from history that this does have an impact on oil demand." In the last few days, China has clamped down as it grapples with its worst Covid spike since the pandemic began, ordering lockdowns and a pause in manufacturing in some cities. Manufacturing hub Shenzhen ordered businesses to suspend production, which affected companies like Apple supplier Foxconn. China is the world's biggest oil importer and any reduction in demand would have an impact on energy prices.

IEA sees Russian oil output slumping by a quarter next month — Russia’s oil output may slump by about a quarter next month, inflicting the biggest supply shock in decades as buyers shun the nation’s exports following its invasion of Ukraine, the International Energy Agency said. “The implications of a potential loss of Russian oil exports to global markets cannot be understated,” the Paris-based agency said in its monthly report on Wednesday. “While it is still too early to know how events will unfold, the crisis may result in lasting changes to energy markets.” Sanctions on trade with Moscow and widespread condemnation of its aggression have rendered Russian oil almost untouchable to traders, with companies from TotalEnergies SE to Shell Plc pledging to curtail purchases. International crude prices rocketed to a 13-year high near $140 a barrel last week, though have since pulled back sharply. Russian oil production could plunge by 3 million barrels a day to 8.6 million a day from next month, further squeezing a world market already strained by the post-pandemic rebound in demand, said the agency, which advises most major economies. World markets now face a shortfall in the next two quarters instead of previously anticipated surpluses, the IEA said. That will force developed nations to further deplete oil inventories that are already at their lowest since 2014. With Russia’s fellow exporters in the OPEC+ coalition so far refusing to fill the gap, the IEA repeated that its members -- which include the U.S. and Japan -- are willing to release more from emergency oil stockpiles. Nations announced the deployment of 60 million barrels at the start of the month. OPEC+ leader Saudi Arabia has rebuffed pressure from Washington to open the taps faster, partly to preserve its political ties to Moscow and partly from a belief that markets remain adequately supplied for the time being. U.K. Prime Minister Boris Johnson is visiting Riyadh and Abu Dhabi in a bid to change their mind.

Oil market heads for 'biggest supply crisis in decades' with Russia's exports set to fall, IEA says - Three million barrels per day of Russian oil output is at risk beginning in April as sanctions hit and buyers shun the nation's exports, the International Energy Agency said Wednesday. "The prospect of large-scale disruptions to Russian oil production is threatening to create a global oil supply shock," the Paris-based firm said in its monthly oil report, adding that this could ultimately be the "biggest supply crisis in decades." "The implications of a potential loss of Russian oil exports to global markets cannot be understated," the IEA added. Russia is the third-largest oil producer behind the United States and Saudi Arabia. But Russia is the largest oil and products exporter in the world, and Europe depends on the nation for supplies. In January 2022, total Russia oil and products production stood at 11.3 million barrels per day, or bpd, of which around 8 million bpd is exported. Looking forward, the IEA said 2.5 million bpd of exports are at risk. Of that, 1.5 million bpd is crude, with products making up the other 1 million bpd. "These losses could deepen should bans or public censure accelerate," the firm added. There's also the possibility that peace is struck, curbing additional disruptions in the oil market. Ukrainian President Volodymyr Zelenskyy said Tuesday that an agreement was beginning to "sound more realistic." Russian Foreign Minister Sergey Lavrov meantime told the BBC there was "some hope of reaching a compromise." It's unclear how sanctions would be unwound should an agreement be reached. So far the sanctions levied against Russia have targeted financial institutions and wealthy individuals. The U.S. and Canada have banned oil imports, while the U.K. has said it will phase out purchases. But other European nations have not followed suit, given their dependence on Russia for energy. For the time being, energy supplies continue to exchange hands due in part to deals that were struck before Russia launched an invasion in Ukraine. But the IEA said that major oil companies, trading houses, shipping firms and banks are backing away from doing business with Russia for reputational reasons and because of a lack of clarity around possible future sanctions. "New business has all but dried up," the firm said. Russia's invasion of Ukraine has sent oil prices into a tailspin, as worries over supply disruptions in an already tight market took hold. Crude surged above $100 for the first time since 2014 in late February the day Russia invaded Ukraine. Prices kept climbing from there. West Texas Intermediate crude, the U.S. oil benchmark, traded as high as $130.50 last week, with Brent crude reaching almost $140. But the blistering rally on the way up has been matched by a steep decline since. On Tuesday WTI traded at $96.62 per barrel, while Brent stood at $99.97.

Oil dips on Russia-Ukraine talks, U.S. inventory data - Oil fell on Wednesday in another volatile session as traders reacted to hoped-for progress in Russia-Ukraine peace talks and a surprising increase in U.S. inventories. Around noon in New York, global benchmark Brent was slightly lower and U.S. crude was slightly higher. The oil market has been on a roller-coaster for more than two weeks, trading in wide ranges of several dollars a day. On Wednesday, global benchmark Brent crude had swung between $97.55 and $103.70 and was down 2.35% to $97.56 per barrel at 2:40 p.m. on Wall Street. U.S. West Texas Intermediate (WTI) crude shed 1.45% to settle at $95.04 per barrel. Last week's frenzied rally pushed Brent briefly past $139 a barrel on worries about extended disruption to Russian supply. Now, a cascade of selling has pushed prices much lower, but some analysts have warned that this reflects too much optimism that the war will end soon. "We're living headline to headline here," The United States and other nations have slapped heavy sanctions on Russia since it invaded Ukraine more than two weeks ago. This disrupted Russia's oil trade of more than 4 to 5 million barrels of crude daily. Brent staged a 28% rally in six days and then a 24% drop over the next six sessions counting Wednesday. A number of factors drove the turnaround, including modest hopes of a Russia-Ukraine peace agreement and faint signals of progress between the United States and Iran to resurrect a 2015 deal that would allow the Islamic Republic to export oil if it agrees to limit its nuclear ambitions. In addition, Chinese demand is expected to slow due to a surge in coronavirus cases there, although figures showed fewer new cases and Chinese stimulus hopes boosted equities. Three million barrels per day of Russian oil and products may not find their way to market beginning in April, the International Energy Agency (IEA) said, as sanctions bite and buyers hold off. "These losses could deepen should bans or public censure accelerate," the Paris-based IEA said in a report that also showed a cut in its oil demand forecast for 2022. U.S. inventories rose by 4.3 million barrels, against expectations for a loss, while stocks at the Cushing, Oklahoma, hub rose as well, alleviating a bit of concern about the low level of inventories there. Crude settled below $100 on Tuesday, the first time since late February. Prices hit a 14-year high on March 7. Signs of progress in Russia-Ukraine peace talks added to the bearish tone. Ukraine's president said the positions of Ukraine and Russia were sounding more realistic, but time was needed. Russia's foreign minister said some deals with Ukraine were close to being agreed. "Fears of a supply disruption have been tempered by tentative signs of progress in ceasefire talks between Russia and Ukraine," "That said, an end to hostilities still seems like a long way off."

WTI Slides Third Session After Fed Hikes Rates, Stock Build - Oil futures nearest delivery accelerated losses in afternoon trade Wednesday after the Federal Open Market Committee raised the federal funds rate 25 basis points and signaled additional rate hikes at each of the six remaining meetings this year, a policy shift aimed at tackling the fastest growth in inflation in four decades. At the conclusion of their two-day policy meeting Wednesday afternoon, the FOMC announced the first increase in the federal funds rate since 2018 and following two years of holding the key benchmark rate near zero to insulate the economy from the pandemic. "The American economy is very strong and well positioned to handle tighter monetary policy," said Federal Reserve Chairman Jerome Powell during a news conference following the FOMC meeting. "We are attentive to the risks of further upward pressure on inflation and inflation expectations." Powell added central bank officials could speed the monetary tightening policy if needed. The Fed also released their first of four economic projections in 2022, with its median forecast for economic growth in 2022 revised down from 4% expected in December to a 2.8% growth rate in real gross domestic product. The first rate hike in four years was well telegraphed, with some analysts and monetary policy watchers believing the Fed took too long to take action to combat inflation. Nonetheless, the rate hike comes amid a horrific war in Eastern Europe that has disrupted trade in oil and commodities out of Russia -- a country with a vast geography and abundance of natural resources. International Energy Agency said Wednesday the prospect of a large-scale disruption to Russian oil production threatens to create a global supply shock in the short-term. The Paris-based energy watchdog estimates that beginning in April, Russian oil production would fall by 3 million barrels per day (bpd), with the Energy Information Administration pegging the decline in April at a more conservative 750,000 bpd. Such a large loss in oil output comes amid an already tight global oil market with limited spare capacity largely held by Saudi Arabia and the United Arab Emirates. The steep drop in Russian oil production could be offset by slower demand growth in the second half of the year but only partially, according to IEA. […] The outlooks were followed by weekly stock data from the EIA showing U.S. commercial crude stockpiles increased by 4.3 million bbl to 415.9 million bbl during the week ended March 12 and are now about 12% below the five-year average. EIA also reported a 3.6 million bbl draw in gasoline stocks for last week to 241 million bbl, with gasoline supplied to market slipping but at the second highest weekly rate in 2022 at 8.944 million bpd. Distillate stocks increased 332,000 bbl to 114.2 million bbl, now about 16% below the five-year average, building as implied demand dropped by a steep 883,000 bpd from the prior week to 3.704 million bpd. NYMEX April West Texas Intermediate futures settled at a $95.04 bbl, down $1.40, and the lowest close since late February. ICE May Brent futures settled below $100 for a second session, down $1.89 at $98.02 bbl. NYMEX April RBOB futures settled 1.06 cents lower at $2.9875 gallon after a choppy session, while April ULSD futures bucked the trend, settling 7.04 cents higher at $3.1001 gallon.

Oil Rallies as Ukrainian Peace Talks Stall -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange rallied in early trade Thursday, with West Texas Intermediate climbing above $100 bbl as investors assessed progress in Ukrainian-Russian peace talks and the financial implications from the first interest rate hike in the United States since the beginning of the pandemic as U.S. Federal Reserve moves to tackle the fastest inflation growth in four decades. Underlining the rally in oil complex is ongoing concerns over the effect of international sanctions on Russian crude production and its ability to sell oil on the global market. International Energy Agency said on Wednesday that Russia's output is likely to fall by 30% or 3 million bpd in April as spot Russian cargoes are shunned by buyers in Europe and the United States. Reports indicate Moscow is looking to boost its oil exports to India and China after a dramatic decline in interest for its oil among Western consumers, but its unclear whether Asian demand for Russian crude could compensate for the lack of buying interest from the West. Russia is the world's largest oil exporter, shipping an average 8 million bpd of crude and refined oil products to customers across the globe. "The prospect of large-scale disruptions to Russian oil production is threatening to create a global oil supply shock. Only Saudi Arabia and the UAE hold substantial spare capacity that could immediately help to offset a Russian shortfall," said IEA in its monthly Oil Market Report. Against the backdrop of these dire forecasts, peace talks between Russian and Ukrainian delegations seemed to have hit a wall after Ukrainian President Volodymyr Zelensky said that Russia must recognize Ukraine's borders as of 1991, meaning that Crimean Peninsula and eastern regions of Lugansk and Donbass would remain within Ukraine. Prospects of a ceasefire agreement seemed realistic this week as Russian offensive stalled and Kremlin softened its position over regime change in Ukraine. Domestically, the Federal Open Market Committee unveiled its first rate hike since 2018 Wednesday, citing progress in the economy and labor market, adding that the economy was strong enough to withstand another six more rate hikes as it vowed to tame the hottest domestic inflation in more than four decades. The Fed's so-called 'dot plots,' a term used to describe the interest rate projections of the Fed's Open Markets Committee, suggest a Federal Funds rate of around 1.9% by the of this year, implying consecutive rate hikes until December, and 2.8% in 2023 and 2024, even as they expect inflation to moderate heading into the start of next year. Near 7:45 AM ET, NYMEX April WTI futures jumped above $100 bbl, up more than $5 bbl, and ICE May Brent futures gained $5.41 to $103.41 bbl. NYMEX April RBOB futures advanced 12.95 to $3.1160 gallon, while April ULSD futures rallied 29.58cts to $3.3966 gallon.

Oil Spikes 8% as USD Hits 5-Week Low, Ceasefire Talks Stall -- Oil futures nearest delivery spiked more than 8% Thursday, climbing on reports suggesting a ceasefire agreement between Russia and Ukraine is a long way off despite a stalled offensive by Russian forces. Also, upbeat economic data in the United States revealed the labor market and industrial production continues to recover from the pandemic disruption, notwithstanding supply constraints and higher costs. Federal Reserve Bank of Atlanta revised higher its outlook for gross domestic product growth in the first quarter to 1.3% Thursday from 1.2% seen on Wednesday (3/16). Earlier this year, Atlanta GDP Nowcast was calling for a 0.5% growth. The update followed this morning's data from the Federal Reserve showing industrial production in the United States continued to expand in February while the Labor Department reported a decline in first-time unemployment claims to a 2 1/2-month low as new hiring picks up. In total, 1.419 million Americans were collecting jobless benefits during the week ended March 5 -- a 50-year low, while down 71,000 from the previous week. Meanwhile, production at U.S. factories rose in February by the most in four months, Fed data showed, increasing 1.2% month-on-month from 0.2% seen at the start of the year. Total industrial production, which also includes mining and utility output, rose 0.5% last month. On Wednesday, the Fed said the economy is strong enough to withstand a steady pace of rate increases in coming months after the central bank introduced the first interest rate hike since the beginning of the pandemic. The Fed also released their first of four economic projections in 2022, with its median forecast for economic growth in 2022 revised down from 4% expected in December to a 2.8% growth rate in real gross domestic product. In the aftermath of the pivotal but widely expected move by the central bank, the U.S. Dollar Index fell to a five-week low 97.970, down 0.66% against the basket of foreign currencies. Stocks on Wall Street again advanced Thursday, sending Dow Jones Industrials 270 points higher and S&P 500 Index up 0.69%. NYMEX April West Texas Intermediate futures spiked $7.94 to settle a tad below $103 barrel (bbl), and ICE May Brent futures advanced $8.62 to $106.64 bbl. NYMEX April RBOB futures rallied 22.91 cents to $3.2166 gallon, while April ULSD futures surged 38.73 cents to $3.4874 gallon. Investors continue to monitor ongoing ceasefire talks between Ukrainian and Russian peace delegations that have been locked in tense negotiations since late February. The lack of progress in the negotiations comes as the Russian offensive largely stalled on nearly all fronts, with reports indicating heavy losses among the Russian troops and civilian population. British Intelligence said on Thursday that Russian President Vladimir Putin's troops "have made minimal progress on land, sea or air in recent days."

Crudes Gain as Ukraine War Outweighs Demand Fears in China -- Oil futures nearest delivery moved mixed in early trade Friday, with the U.S. crude benchmark holding above $103 bbl as traders assess the impact of escalating fighting in Ukraine on global oil and commodity trade bruised by international sanctions levied on Moscow for its invasion of the former Soviet state against demand destruction in China besieged by resurgent COVID-19 infections. China is now facing the biggest wave of COVID-19 infections since Wuhan became the original center of the coronavirus pandemic in early 2020. New COVID-19 infections in China jumped to 2,958 cases on Thursday, a sharp increase from 337 cases reported just ten days ago. To combat the spread, health authorities there once again resorted to stringent lockdowns, mass testing, and business shutdowns across several metropolitan areas. The cities impacted by the latest outbreak represent 25% of nationwide gross domestic product, according to a Goldman Sachs analysis, leading to a reduction in oil consumption of about 1.15 million bpd for the next three months. On the flip side, this development is likely to provide some relief to a tight global oil market, with weaker Chinese demand realized just as the global market is contending with a falloff in Russian oil exports. There is a wide range of projections on the degree and extent that Russian oil exports could be impaired by Western sanctions, and through the extension of lost exports, the damaging effect on upstream production. International Energy Agency this week made the most aggressive call yet on the likely falloff in Russian oil output, forecasting a 30% or 3 million bpd decline beginning in April. Independent analysis suggests the actual decline could be close to 50% over the course of five years, hammered by an absence of equipment for development of unconventional and offshore oil reserves and lack of technological capacities to intensify production at active fields. Existing conventional oil fields use enhanced oil recovery methods, such as hydraulic fracturing to increase oil recovery, with hydraulic fracturing equipment critical for maintaining Russian oil production. Russia's current output stands at 11.45 million bpd, according to this week's Monthly Oil Market Report from the Organization of the Petroleum Exporting Countries. Although difficult to pin down, some traders estimate around 2.5 million bpd in Russian crude oil cargos are stranded at sea unable to find buyers. Goldman Sachs estimates that export disruption might be smaller-than-expected as time goes by. Goldman reckons some cargos are still changing hands under-the-radar, noting that many vessels are disabling satellite trackers. Furthermore, flows of oil via long-term contracts, which could represent half of Russian seaborne exports, are less likely to be disrupted, added the wall street investment bank. Russia is the world's largest oil exporter, shipping 8 million bpd of crude and refined oil products to customers across the globe. In early trading, NYMEX April West Texas Intermediate futures advanced $0.57 to trade near $103.56 bbl, and ICE May Brent futures gained $0.45 to $107.12 bbl. NYMEX April RBOB futures slipped 0.50cts to $3.2116 gallon, while April ULSD futures gained 3.38cts to $3.5212 gallon.

Oil Rebounded to End Week as Ukraine Peace Hopes Faded - Oil posted its first back-to-back weekly decline since December as intense volatility and geopolitical risks continued to upend markets. Futures in New York fell 4.2% for the five-day period to settle at $104.70 after swinging by more than $16 a barrel throughout the week. The price gyrations have followed rapid developments surrounding the war in Ukraine, exacerbating volatility amid supply concerns and conflicting news in peace talks that sent oil surging by the most in 16 months Thursday. The IEA said Friday that oil markets are in an “emergency situation” that could get worse, days after stating that the potential loss of Russian oil exports “cannot be understated” in their monthly report. Fundamentally, oil markets remain tight but “until we get some resolution on what Russia’s ultimate goal here is, you’re going to have a lot of sentiment and a lot of volatility in oil prices,”. There is at least $20 of geopolitical premium currently priced in, he added. A renewed Covid-19 outbreak in China has compounded the moves, as the country imposes some of its heaviest virus-related restrictions since early 2020. President Xi Jinping pledged to reduce the economic impact of his Covid-fighting measures, signaling a shift in a longstanding strategy that has minimized fatalities, but weighed heavily on the world’s second-largest economy. The rise in oil prices, along with other commodities exported by Russia, has also fanned inflation fears as governments try to encourage growth after the pandemic. The Federal Reserve this week raised interest rates and signaled further hikes to tackle the fastest price gains in four decades. The IEA said earlier this week Russia’s oil output could slump by about a quarter next month, inflicting the biggest supply shock in decades as buyers shun the nation’s exports. On Friday, the agency said advanced economies could curb their oil demand by reducing speed limits and using public transport to ease potential strains on the market. WTI for April delivery rose $1.72 to settle at $104.70 a barrel in New York. Brent for May settlement increased $1.29 to settle at $107.93 a barrel. Russian crude is still being treated with extreme caution by buyers worried about damage to their reputation or falling foul of sanctions. Since the invasion of Ukraine, the lion’s share of oil refining companies across Europe have said they will scale back purchases from Moscow. One of the most volatile corners of the oil market has been diesel, partly because Russia is a major exporter to the rest of Europe. Open interest -- the number of contracts outstanding in Europe’s main diesel contract -- has fallen by more than half from its high last year, as traders take fright at the volatility.

Saudi oil refinery attacked by drone, sparking small fire - An oil refinery in Saudi Arabia's capital, Riyadh, was attacked by drone, causing a small fire that did not cause injuries or affect supplies, the energy ministry said Friday. The statement did not specify where the drone strike was launched from. There was no immediate claim of responsibility. The kingdom's oil facilities have been a target of Yemen's Houthi rebels in the past. The Iranian-backed Houthis claimed responsibility for a shocking attack in 2019 at the Abqaiq oil processing facility in Eastern Province, which temporarily knocked out half the kingdom's daily production. The ministry statement, published by the state-run Saudi Press Agency, was released shortly after midnight Friday and said the attack took place around 4:40 am on Thursday. The ministry said such attacks not only target Saudi Arabia, but also the security and stability of energy supply to the world. Saudi Arabia has been involved in Yemen's civil war since 2015, fighting against the Houthis who overran the capital of Sanaa and ousted the government there from power. Despite seven years of fighting and war, the Houthis remain in control of Sanaa and much of northern Yemen. The war in Yemen has killed tens of thousands of people, both fighters and civilians, and spawned the world's worst humanitarian crisis. Many more have been internally displaced. Around 13 million Yemenis are headed for starvation due to a protracted civil conflict and a lack of funding for humanitarian aid, the UN food agency has warned.

Missile strikes from east hit Erbil in Iraqi Kurdistan -A dozen ballistic missiles were fired into the capital of Iraq's northern Kurdish region Erbil in the early hours of today, according to Kurdish and Iraqi officials. The missiles "were launched from across Iraq's eastern border" and "targeted areas around the new US consulate compound" in Erbil, said Lawk Ghafuri, the head of Kurdistan's foreign media office after the incident. "The attack did not result in human casualties, only material damages," he said. Ghafuri added that "none of the missiles" actually hit the US consulate, which is currently under construction, but "areas around the compound" were. The strikes "resulted in the injury of two people," Erbil's governor Omid Khoshnow said. Masrour Barzani, the prime minister of the Kurdistan Regional Government (KRG) "strongly" condemned what he labelled a "terrorist attack," but stopped short of assigning blame. His counterpart in Baghdad, Mustafa Kadhimi, said the security forces of the federal Iraqi government are helping to investigate who was behind the attack. But numerous mentions by Kurdish officials of the attack originating from the east suggests a belief that the missiles may have been launched from Iran — the source of several similar attacks on northern Iraq in recent years One of the more notable recent ballistic strikes came on two bases that house US troops — one in Erbil, the other in western Iraq — in early January 2020 in retaliation for the targeted killing by the US of senior Iranian military commander Qassem Soleimani on 2 January. Hiwa Afandi, a deputy minister in the Kurdistan Regional Government, said today that Erbil International Airport, where US military forces are currently stationed, had not been a target in this latest strike. Tehran has yet to issue any official comment on today's attacks. But Iranian state media has been reporting that several of the locations targeted in the attack were bases that were "unofficially run by Israel."

U.S. Looks Into Iraq Attack After Iran Says Israel Killed Colonels in Syria _ The U.S. military is tracking reports of a missile attack near Washington's consulate in the northern Iraqi city of Erbil days after two Iranian colonels were reportedly killed during an airstrike in Syria that was blamed on Israel.A Pentagon spokesperson told Newsweek that the Defense Department was "looking into the reported attack near Erbil," but did not provide any details. A spokesperson for Iran's permanent mission to the United Nations told Newsweekthere was no information so far on the event.The semi-autonomous Kurdistan Regional Government's Directorate General of Counter Terrorism reported that 12 ballistic missiles targeted near the U.S. consulate in Erbil and were launched outside of Iraq's borders to the east, where Iran is located. News and purported footage of the strike were shared widely on social media on Saturday afternoon, early Sunday local time. Rocket attacks have targeted U.S. positions in Iraq for years and have sometimes drawn U.S. strikes against pro-Iran militia positions, most recently ordered by President Joe Biden last June. But Iran has not directly fired missiles on U.S. positions since January 2020, days after former President Donald Trump ordered the killing of Iranian Revolutionary Guard Quds Force Major General Qassem Soleimani at Baghdad International Airport in Iraq. The Revolutionary Guard also vowed to take revenge Wednesday after it said two of its colonels were killed in an Israeli airstrike near Damascus, where they were said to be supporting the Syrian government's "counterterrorism efforts."

Iran’s attack on Irbil confirms widening of US/Russia conflict to the Middle East -- As the war between Russia and Ukraine spirals out of control, with a Russian missile strike on a military training base just 15 miles from the Polish border with Poland, a NATO ally, geo-political fault lines in the Middle East threaten to open another front and destabilise the entire region. On Sunday morning, Iran launched a dozen ballistic missiles that landed near the new US consulate compound eight miles north of the northern Iraqi city of Irbil, capital of the semi-autonomous Kurdistan Regional Government (KRG). The attack resulted in minor damage to the nearby satellite broadcasting channel Kurdistan24 but no casualties, although an Iranian official claimed that two Israeli officials had been killed. Israel has refused to comment on the attack. Iran’s attack on Irbil marks a significant escalation in the ongoing tensions between Tehran and Israel, and by extension the US. It follows years of covert warfare between the two countries both in Iran, where Israel has carried out assassinations, blown up installations, launched cyber-attacks on vital Iranian computer systems, including nuclear facilities, and attacked sea-going vessels, and in Syria, where Israel has attacked Lebanese Shia Hezbollah fighters, their weapons dumps and Iranian-linked facilities. It was initially thought that the target in Irbil was the American compound, where US forces provide air and other military and intelligence support for its puppet regime in Baghdad. Once complete, the compound will be one of the largest US diplomatic compounds in the world. The relocation to the KRG follows Iraqi Prime Minister Mustafa al-Kadhimi’s demand that they leave the al-Asad airbase and other bases where US troops were stationed. He demanded this in the aftermath of the US assassination of Islamic Revolutionary Guard Corps (IRGC) commander General Qassem Suleimani in January 2020 that led to several attacks on US forces and facilities in Iraq. However, Washington has insisted the missiles were not aimed at its compound. Tehran said the attack was in retaliation for an Israeli strike on an Iranian base near the Syrian capital of Damascus. That attack on March 7 killed four people, including two members of the Islamic Revolutionary Guard Corps (IRGC), who play a key role in supporting the Lebanese Shia Hezbollah fighters with military expertise and supplies. The Revolutionary Guards pledged to “make the Zionist regime pay for this crime.” The IRGC said the attack was a warning to the US and Israel and was aimed at “the strategic center of the Zionist conspiracies in Erbil.” A foreign ministry spokesperson said Iran had warned the Iraqi authorities on numerous occasions that its territory should not be used by third parties to conduct attacks against Iran.

India eyeing discounted Russian oil: reports -India is considering a Russian offer to buy crude oil and other commodities at discount prices a week after the U.S. banned all Russian energy imports, Reuters reported on Monday. India, the world's third-largest oil consumer and importer and one of the few countries not to condemn Moscow's invasion of Ukraine, currently imports 80 percent of its oil, but only about 2 percent to 3 percent of those purchases come from Russia. "Russia is offering oil and other commodities at a heavy discount. We will be happy to take that," an Indian government official told Reuters. According to Bloomberg, India is looking to bypass Western-imposed sanctions that would allow it to purchase cheaper oil from Russia. Russian Deputy Prime Minister Alexander Novak told Indian Petroleum Minister Hardeep Puri in a phone call on Friday that the country is keen to increase its oil and petroleum product exports to India along with Indian investments in the Russian oil sector, according to a statement issued by Moscow. Puri and Novak also discussed strengthening the India-Russia strategic partnership in the energy sector. "Russia’s oil and petroleum product exports to India have approached $1 billion, and there are clear opportunities to increase this figure,” a statement from Moscow said about the telephone call. They also discussed "current and potential joint projects in the fuel and energy industry and noted that current projects continue to be steadily implemented."

Russia counts on sanctions help from China as US warns Beijing - - Russia has said it is banking on China’s help to withstand the crippling economic sanctions placed by Western nations over the war in Ukraine as the United States warned Beijing not to provide that lifeline.Russian Finance Minister Anton Siluanov said sanctions had deprived Moscow of access to $300bn of its $640bn in gold and foreign exchange reserves, and added that there was pressure on Beijing to shut off more.“We have part of our gold and foreign exchange reserves in the Chinese currency, in yuan. And we see what pressure is being exerted by Western countries on China in order to limit mutual trade with China. Of course, there is pressure to limit access to those reserves,” he said on Sunday. “But I think that our partnership with China will still allow us to maintain the cooperation that we have achieved, and not only maintain, but also increase it in an environment where Western markets are closing.”Western countries have imposed unprecedented sanctions on Russia’s corporate and financial system since it invaded Ukraine on February 24 in what it calls a special military operation. Siluanov’s comments in a TV interview marked the clearest statement yet from Moscow that it will seek help from China to cushion the effect.But US NSA Jake Sullivan said Washington has warned China not to provide it.“We are communicating directly, privately to Beijing, that there will absolutely be consequences for large-scale sanctions, evasion efforts or support to Russia to backfill them,” Sullivan told CNN.“We will not allow that to go forward and allow there to be a lifeline to Russia from these economic sanctions from any country, anywhere in the world,” added Sullivan, who is due to meet China’s top diplomat Yang Jiechi in Rome on Monday.

Saudi Arabia Considers Accepting Yuan Instead of Dollars for Chinese Oil Sales - Saudi Arabia is in active talks with Beijing to price some of its oil sales to China in yuan, people familiar with the matter said, a move that would dent the U.S. dollar’s dominance of the global petroleum market and mark another shift by the world’s top crude exporter toward Asia. The talks with China over yuan-priced oil contracts have been off and on for six years but have accelerated this year as the Saudis have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom, the people said.

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