Category: Nieuws

Russian crude oil imports into the European Union and United Kingdom fell to 1.7 million barrels per day (bpd) in August from 2.6 million bpd in January, but the EU was still the biggest market for Russian crude, according to the IEA.

The UK has already stopped importing Russian crude following Moscow’s invasion of Ukraine, and the EU will ban imports from December to strip the Kremlin of revenue to fund the war. read more

Imports from the United States have replaced about half the 800,000 barrels of lost Russian imports, with Norway providing around a third.

The United States could soon overtake Russia as the main crude supplier to the EU and the UK combined – by August, U.S. imports lagged those from Russia by just 40,000 bpd compared with a 1.3 million bpd pre-war average, according to the IEA.

Outside the EU, Russia’s top crude oil export markets are China, India and Turkey.

WHAT ARE THE ALTERNATIVES TO RUSSIAN CRUDE?

Under the looming ban, the EU will need to replace an additional 1.4 million barrels of Russian crude, with some 300,000 bpd potentially coming from the United States and 400,000 bpd from Kazakhstan, the IEA has said.

Norway’s largest oilfield Johan Sverdrup, which produces medium-heavy crude similar to Russia’s Urals, also plans to ramp-up production in the fourth-quarter, potentially by 220,000 bpd.

The IEA says imports from other areas such as the Middle East and Latin America would be needed to fully meet EU demand.

Some Russian oil will continue to flow into the EU via pipelines as the ban excludes some landlocked refineries.

HOW MUCH DOES THE EU DEPEND ON RUSSIAN CRUDE IMPORTS?

Germany, the Netherlands and Poland were the top importers of Russian oil in Europe last year, but all three have capacity to bring in seaborne crude.

Landlocked countries in Eastern Europe, such as Slovakia or Hungary, however, have few alternatives to pipeline supplies from Russia.

The EU’s dependence on Russia has also been underpinned by companies such as Rosneft (ROSN.MM) and Lukoil (LKOH.MM), controlling of some of the bloc’s largest refineries.

Russian crude oil flows, based on loading data in August, rose month-on-month to Italy and the Netherlands, where Russian oil major Lukoil owns refineries, according to the IEA.

The German government on Sept. 16 took control of the Rosneft-owned Schwedt refinery which supplies about 90% of Berlin’s fuel needs.

On the same day, the Italian government said it hoped Lukoil would find a buyer for its ISAB refinery in Sicily, which accounts for a fifth of the country’s refining capacity.

Reuters by Nerijus Adomaitis, September 30, 2022

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Oil prices rose on Friday as a spill at Iraq’s Basra terminal appeared likely to constrain crude supply, but remained on track for a weekly decline on fears that hefty interest rate increases will curb global economic growth and demand for fuel.

Brent crude futures were up 70 cents, or 0.8%, at $91.54 a barrel by 1:43 p.m. EDT (1743 GMT).

U.S. West Texas Intermediate (WTI) crude futures gained 30 cents, or 0.4%, to $85.40.

Both benchmarks were down about 1% on the week, hurt partly by the U.S. dollar’s strong run, which makes oil more expensive for buyers using other currencies. The dollar index was largely flat on the day , but on track for its fourth weekly gain in five weeks.

In the third quarter so far, both Brent and WTI are down about 20% for the biggest quarterly percentage declines since the start of the COVID-19 pandemic in 2020.

Oil exports from Iraq’s Basra oil terminal are being gradually resumed after they were halted last night due to a spillage, which has been contained, Basra Oil Company said.

The spill at the port, which has four loading platforms and can export up to 1.8 mln barrels per day, drove up prices on the prospect of lower global crude supply.

“That definitely threw a scare into the market because the initial report was that those barrels were going to be out of the market for some time,” said John Kilduff, partner at Again Capital LLC in New York.

Investors are bracing for a large increase to U.S. interest rates, which could lead to a recession and reduce fuel demand. The Federal Reserve is widely expected to raise its benchmark overnight interest rate by 75 basis points at a Sept. 20-21 policy meeting.

“The increasing likelihood of global recession, as underscored by the recent renewed downturn in equities could continue to provide a limiter of upside (oil) price possibilities into next month and possibly beyond,” Jim Ritterbusch of Ritterbusch and Associates said in a note.

The market also was rattled by the International Energy Agency’s outlook for almost zero growth in oil demand in the fourth quarter owing to a weaker demand outlook in China.

“Both the IMF and World Bank warned that the global economy could tip into recession next year. This spells bad news for the demand side of the oil coin and comes a day after the IEA forecast (on) oil demand,” said PVM analyst Stephen Brennock.

“Recession fears coupled with higher U.S. interest rate expectations made for a potent bearish cocktail.”

Other analysts said sentiment suffered from comments by the U.S. Department of Energy that it was unlikely to seek to refill the Strategic Petroleum Reserve until after the 2023 financial year.

On the supply side, the market has found some support on dwindling expectations of a return of Iranian crude as Western officials play down prospects of reviving a nuclear accord with Tehran.

Oil prices could also be supported in the fourth quarter if OPEC+ members cut production, which will be discussed at the group’s October meeting. Europe faces an energy crisis driven by uncertainty on oil and gas supply from Russia.

U.S. crude supply appeared headed for an increase, as energy firms this week added oil and natural gas rigs for the first time in three weeks as relatively high crude prices encouraged some firms to drill more, mainly in the Permian Basin, according to energy services firm Baker Hughes Co.

Reuters by Shadia Nasralla, September 30, 2022

Oil prices rose in volatile trade on Tuesday as worries about tight fuel supplies ahead of winter offset investor concerns about lower demand in China, the world’s biggest crude importer, and further increases in U.S. and European interest rates.

Brent crude had risen 50 cents, or 0.5%, to $94.50 a barrel by 0644 GMT, while WTI crude increased by 52 cents, or 0.6%, to $88.30 a barrel. Both contracts fell by more than $1 earlier in the session.

Worries over tighter inventories continue to support prices.

In the United States, the Strategic Petroleum Reserve (SPR) fell 8.4 million barrels to 434.1 million barrels in the week ended Sept. 9, the lowest since October 1984, according to data released on Monday by the Department of Energy.

U.S. President Joe Biden in March set a plan to release 1 million barrels per day over six months from the SPR to tackle high U.S. fuel prices, which have contributed to inflation.

U.S. commercial oil stocks are expected to have fallen for five weeks in a row, dropping by around 200,000 barrels in the week to Sept. 9, a preliminary Reuters poll showed on Monday.

The American Petroleum Institute (API), an industry group, will issue its inventory report at 4:30 p.m. EDT (2030 GMT) on Tuesday. The U.S. Energy Information Administration (EIA) reports at 10:30 a.m. EDT (1430 GMT) on Wednesday.

“We remain constructive on oil prices despite intensifying headwinds to demand, as the supply side remains supportive with slower-than-expected U.S. output growth and a proactive OPEC+,” Amarpreet Singh, an energy analyst at Barclays, wrote a note.

Prospects for a revival of the West’s nuclear deal with Iran remained dim. Germany expressed regret on Monday that Tehran had not responded positively to European proposals to revive the 2015 agreement. U.S. Secretary of State Antony Blinken said that an agreement would be unlikely in the near term.

Capping gains on oil prices on Tuesday were renewed concerns about lower global fuel demand, as China, the world’s second-largest oil consumer, continues to impose COVID-19 curbs.

The number of trips taken over China’s three-day Mid-Autumn Festival holiday shrank, with tourism revenue also falling, official data showed, as strict COVID-19 rules discouraged people from travelling.

The U.S. consumer price index (CPI) data is set for release at 1230 GMT on Tuesday. While expectations are that the core inflation rate may show a peak, the European Central Bank and the Federal Reserve are prepared to increase interest rates further to tackle inflation.

“The odds for the Fed to keep aggressive rate hikes will be strengthened if U.S. CPI comes out hotter than expected,” said Tina Teng, an analyst at CMC Markets.

That could lift the value of the U.S. dollar against other global currencies and make dollar-denominated oil more expensive for investors.

By Reuters, Stephanie Kelly, September 16, 2022

At least three Chinese state oil refineries and a privately run mega refiner are considering increasing runs by up to 10% in October from September, eyeing stronger demand and a possible surge in fourth-quarter fuel exports, people with knowledge of the matter said.

Chinese refiners are expecting Beijing to release up to 15 million tonnes worth of oil products export quotas for the rest of the year to support the no. 2 economy’s sagging exports. Such a move would signal a reversal in China’s oil products export policy, add to global supplies and depress fuel prices.

After a recent slide in benchmark Brent crude prices to below $100 a barrel, Chinese refiners have taken arbitrage opportunities to boost stockpiles, traders said, booking supertankers to haul crude oil to China from the Americas and Middle East.

An official with a state refinery said his plant is eyeing a 10% hike in runs from September to about 240,000 barrels per day (bpd). “We’re raising runs next month in preparation for a possible opening in exports, though nobody has a clear idea how big the opening would be,” the official said.

A second official with another state refinery said his plant is also planning about an 8% hike in throughput next month, but added that the plan had been driven by firmer domestic margins. A third state refinery expects to restart a 60,000-bpd crude unit next month after maintenance, one of the sources said.

China’s single largest refinery Zhejiang Petrochemical Corp, which is capable of processing 800,000 barrels per day of crude, is aiming to ramp up runs in the coming months from the current levels of 700,000-750,000 bpd, according to two sources familiar with its operations.

A ZPC representative confirmed the firm is considering a run increase due to signs of economic recovery, but declined to elaborate further.

Average refining rates at China’s state-owned refineries had climbed to 73.74% as of last week, up 2.56% from end-August, according to Chinese brokerage SHZQ Futures.

Run rates at independent refineries in Shandong, whose combined refining capacity accounts for a fifth of China’s total, also rebounded last week after falling for five weeks since mid-July.

MORE SHIPMENTS

The rebound in China’s crude demand has boosted the lumpsum freight rates for Very Large Crude Carriers (VLCC) sailing from the U.S. Gulf and the Middle East to China to their highest since May 2020 at about $10 million, according to data from Simpson Spence Young on Refinitiv Eikon.

“I believe that China-bound freight rates strengthen on the hope of a China demand recovery… the rumour of an extra large amount of product exports in Q4 also fueled market optimism,” said Emma Li, an analyst from Vortexa Analytics.
China’s crude oil demand rebounds, drives supertanker freight rates to highest since 2020

U.S. crude arriving in China in October is expected to hit the highest since December 2020 at 450,000 bpd, up from about 300,000 bpd in the August-September period, said Vitkor Katona, lead crude analyst from analytics firm Kpler.

Middle East crude shipments to China are also rising, with September loadings set to reach 4.7 million bpd, 4% higher than in August and 8% higher than July, Kpler data showed.

Onshore crude inventories in China fell to about 986 million barrels in mid-September, down 6% from a peak of 1,049 million barrels at end-June, according to data analytics consultancy Kayrros.

Reuters by Muyu Xu, September 23, 2022

China’s refiners are set to release huge stocks of diesel onto the world market just in time to meet winter demand, according to industry sources.

Refinitiv, a unit of the London Stock Exchange Group, said Beijing has granted refiners up to 15 million tonnes of oil product quotas for the rest of the year, partially reversing an export ban imposed last year.

Mr John Driscoll, managing director of consultancy JTD Energy Services, said any expanded exports from China would provide relief to a jittery market facing tight supplies ahead of winter.

“If China goes ahead with expanding its diesel exports, it will be viewed as a positive and constructive move for market,” he added.

“Other regional refiners might not be too pleased because the additional supplies will soften the market outlook, but consumers will not be complaining.”

Mr Yaw Yan Chong, director of oil research at Refinitiv, said most of the new export quotas would be for diesel, used commonly as heating fuel and power generation.

He noted that China exported an average of two million tonnes of diesel a month before petroleum export curbs that came into effect in July last year restricted shipments to around 525,000 tonnes a month.

While Beijing has not officially made an announcement on the quota, Mr Yaw said he expects diesel exports to revert to pre-clampdown levels in the months ahead.

Beijing manages exports of refined products using a quota system, issuing several batches of allocations over the course of a year. It uses calibrates product shipments to global markets to manage domestic supply and demand.

Refinitiv data also shows that the fresh quotas would bring total oil product exports by China for the year to 39 million tonnes, up 4 per cent from 2021.

Mr Yaw said the move to expand exports was unprecedented, especially as recent policy in the world’s second-largest economy has been to curb excessive domestic refinery production amid a broad plan to reduce carbon emissions.

He noted that the policy had cut exports of refined petroleum products like gasoline, diesel and jet fuel over the past year because China’s nationally run refiners had to fill the vacuum left by private refiners and meet domestic demand.

“We believe that most of this export quota will be for diesel and that it is driven by the Chinese refiners wanting to cash in on the strong international margins for the product in the face of poor domestic demand due to months of widespread pandemic-enforced lockdowns in the country,” he said.

Diesel is widely used as heating fuel in the northern hemisphere in winter but supplies this year have been under severe pressure because of the conflict between Russia and Ukraine.

Price-reporting agency Quantum Commodity Intelligence expects any increased exports from China will make their way west.

“It increases the likelihood that Asian volumes will head into the European market, where supply has tightened considerably since the Ukraine war. Spreads are likely to stay wide for some time as Europe seeks to replace Russian oil products after European Union sanctions begin in February.”

Diesel margins, or the profits a refinery makes for producing the distillate fuel, were trading around US$45 a barrel in mid-September but had weakened to around US$35 a barrel as at Friday’s Asian market open.

Around half of Russia’s petroleum product exports went to Europe before the Ukraine war, noted the International Energy Agency (IEA), but stinging sanctions imposed by Western powers on Moscow’s energy shipments have caused severe supply disruptions and sent fuel and electricity costs to historic highs.

The impact is reverberating globally as European states scour the world for alternative supplies.

In Europe, gas-to-oil switching for power generation has added to the usual seasonal demand for winter fuel.

The Straits Times, by Luke Pachymuthu, September 23, 2022

The Netherlands is purchasing millions of barrels of diesel in preparation for what is set to be a winter like no other.

The country’s petroleum stockpiling agency, COVA, has issued tenders seeking more than three million barrels of diesel for delivery before the end of the year, with potentially more to come. That comes as the European Union prepares to cut-off seaborne supplies from Russia, amid a broader energy crunch.

Earlier this year, the Netherlands was part of a globally coordinated release of crude and oil products in response to Russia’s invasion of Ukraine and sold about 180,000 tons of diesel from its strategic inventories. Now, the Dutch government wants to rebuild its diesel stockpiles, requiring the replacement of barrels previously sold, along with millions more.

The decision to boost stockpiles is in preparation for both winter and the forthcoming EU sanctions, according to a person familiar with the matter. COVA was asked by the Dutch government to restore the volumes that were distributed in April-May and boost inventories, if possible, to do so without disturbing markets, the person said. The Dutch government declined to comment.

From early February, almost all seaborne cargoes into the bloc from Russia — still the continent’s biggest external supplier — will be banned. That will clash with Europe’s consumption of diesel-type heating fuel surging in the coldest months of the year. This year, there’s also the added pressure of so-called gas-to-oil switching, whereby businesses burn diesel and other fuels instead of costly natural gas.

COVA has been instructed by the government to return its stocks to the original levels, according to a statement on its website. The agency also has been told to expand temporarily its diesel holdings by 500,000 tons — enough to supply the whole of Germany, Europe’s biggest economy, for almost four days.

Bloomberg by Jack Wittels, September 20, 2022

Fluxys, Advario Stolthaven Antwerp and Advario Gas Terminal have joined forces to study the feasibility of building an open-access green ammonia import terminal at the Port of Antwerp-Bruges, according to the company’s release.

The aim is to offer a solution to the growing demand for importing and storing green energy and raw materials as the decarbonisation drive continues across Europe.

By combining their strengths and expertise in logistics, storage and pipeline transmission, Fluxys, Advario Stolthaven Antwerp (a 50-50 joint venture with Stolthaven Terminals) and Advario Gas Terminal want to ascertain the optimum ammonia storage solution for northwest Europe.

Fluxys, an independent energy infrastructure group headquartered in Belgium, and the Advario terminals are now engaging with major industrial operators and energy suppliers to introduce their project.

Located at Belgium’s Port of Antwerp-Bruges, the future terminal – which is expected to be operational in 2027 – will deliver storage and multimodal logistics solutions for ammonia (train, truck, barge and possibly ammonia pipelines connected to local industrial sites).

It will also provide facilities to convert ammonia back into hydrogen and connect to the Fluxys open-access hydrogen network to ensure supply throughout north-west Europe.

Importing ammonia is an efficient way of bringing in large quantities of green energy and raw materials from overseas, where the abundance of solar and wind energy can be used to make hydrogen, which can then be combined with nitrogen from the air to produce ammonia.

The project also aligns with the REPowerEU programme, which has set a target of 20 million tonnes of green hydrogen consumption by 2030, one fifth of which should be covered by ammonia imports.

By PortNews, September 16, 2022