China added some downward pressure on oil prices this week when it made clear its intention to buy more Russian oil at a discount. Between China and India, Russia is rushing to pivot to Asia as the EU tries to give up its oil.
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Friday, May 20, 2022
So far, India has been buying heavily discounted Russian crude, leaving markets wondering if Moscow could pull off a full pivot to Asia. Yet this week it was China that grabbed the headlines, with Beijing launching direct government-to-government talks on buying cut-price crude to “replenish strategic stocks”. This, despite the prospect of an imminent reopening of China, added some downward pressure on oil prices as ICE Brent traded around $112 a barrel on Friday.
EU launches $220 billion campaign to phase out Russian fossil fuels. The European Commission has unveiled its $220 billion plan to end its reliance on Russian fossil fuels by 2027, consisting of $120 billion for new renewable projects, $30 billion for power grids and $59 billion dollars for energy savings and heat pumps.
The United States will ease sanctions against Venezuela. The Biden administration plans to allow European companies still active in Venezuela to divert more oil to the continent, while the US oil major Chevron (NYSE: CVX) will be authorized to negotiate a resumption of activities in the Latin American country.
Moscow says tariffs will trigger higher prices. Russia’s top officials have claimed that the US proposal to impose tariffs on Russian oil will force buyers to pay more because the cost of the tariff will be rolled into the final price.
The UN calls for a global end to fuel subsidies. UN Secretary-General Antonio Guterres has urged all governments to end fossil fuel subsidies, which have reached $500 billion globally, seeking to increase pressure on polluters ahead of the climate conference COP27 in Egypt in November.
ADNOC announces the biggest discoveries of the year. The United Arab Emirates’ national oil company ADNOC has announced three oil discoveries totaling 650 million barrels, with the largest raising the reserve tally of the onshore Bu Hasa field by 500 million barrels, meaning there could be even more exports from Murban in the years to come.
China plans to mop up Russian crude for strategic stocks. According to a Bloomberg report, the Chinese government is in direct talks with Russian authorities to begin purchasing additional supplies of crude that would be used to replenish China’s strategic stocks.
Occidental moves into the Colombian offshore blocks. State-controlled Colombian oil company Ecopetrol (NYSE: ECO) announced its alliance with the American oil major Western (NYSE:OXY) develop four deepwater blocks offshore Colombia, with the latter being the operator of the blocks.
Shell’s Brazilian offshore Wildcats fail to impress. Three exploration wells drilled by a British oil major Shell (LON:SHEL) in three offshore blocks in Brazil, costing it more than $1 billion, all proved dry, another setback for the country after Exxon’s $1.6 billion drilling campaign failed.
ADNOC will build a giant new LNG facility. The United Arab Emirates’ national oil company ADNOC has announced that it will build a new LNG facility in Fujairah with a capacity of 9.6 million tonnes per year, more than double the country’s current capacity of 5, 8 mtpy once the planned liquefaction plant comes into operation in 2027.
Iron ore soars on falling mortgage rates in China. As China unexpectedly cuts the 5-year loan prime rate by 15 basis points to 4.45%, iron ore futures in China rose sharply on hopes of a stronger recovery. construction activity, with the June contract up 6% today at $127. /mt.
ExxonMobil sells Barnett Shale assets for $750 million. In a move widely anticipated, the American oil major ExxonMobil (NYSE:XOM) sold its Barnett shale gas assets to Thai producer BKV Corp for $750 million, well above last year’s $500 million valuation thanks to a higher natural gas price environment.
Iraq seeks legal action to bring Kurdistan under control. The Iraqi Oil Ministry reportedly appointed the law firm Cleary Gottlieb Steen and Hamilton to approach oil and gas companies operating in Iraqi Kurdistan to renegotiate their contracts and bring them into compliance with applicable Iraqi law, bypassing the KRG.
Half of Russian gas buyers open new bank accounts. The Russian Deputy Prime Minister said that half of the Gazprom (MCX:GAZP) European gas buyers have opened accounts at Gazprombank in foreign currencies and rubles, potentially hinting at a new modus operandi in the EU-Russia standoff.
Vitol can stay in Mexico after naming bribe takers. Global trading house Vitol can continue to operate in Mexico, according to the country’s president, AMLO, after naming officials who allegedly received bribes in the 2015-2020 period and likely also paid the 30 million dollars in damages.
By Tom Kool for Oilprice.com
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