Released February 25, 2022 | SUGAR LAND
en
Researched by Industrial Info Resources (Sugar Land, Texas)--Mr. Oil Market at first responded to Russia's invasion of Ukraine by shooting up over $100.
Reuters: Oil tops $105/bbl after Russia attacks Ukraine
Oil prices jumped on Thursday, with Brent rising above $105 a barrel for the first time since 2014 before easing, after Russia's attack on Ukraine exacerbated concerns about disruptions to global energy supply. Russia launched an all-out invasion of Ukraine by land, air and sea in the biggest attack by one state against another in Europe since World War Two.
U.S. President Joe Biden unveiled harsh new sanctions against Russia, imposing measures to impede its ability to do business in the world's major currencies along with sanctions against banks and state-owned enterprises.
But oil has since come back down closer to the $90 level.
It seems that in the near term, the sanctions imposed on Russia as well as possible talks between Russia and Ukraine are tempering price as cautious traders weigh all the news hitting the wires.
MarketWatch: Oil edges lower as traders monitor Russia invasion of Ukraine
Crude drifted lower after news reports, citing a summary of a call between Russian President Vladimir Putin and Chinese leader Xi Jinping provided by China's Foreign Ministry, said Russia was ready to conduct negotiations with Ukraine.
On Thursday, oil ended with gains but well off session highs above $100 a barrel, with the pullback tied by analysts to relief that a new round of sanctions announced by the U.S. and its allies against Moscow didn't target Russia's energy exports or cut the country off from the SWIFT payment system.
"This means that energy imports from Russia can still be paid for. The question now is how Russia will respond to the sanctions that have been decided, which will hit the banking sector and the technology industry hardest of all," said Carsten Fritsch, commodity analyst at Commerzbank, in a note.
Though, these sanctions are not yet imposed on Russia energy exports as the western world remains very concerned about supply disruptions in an extremely tight market. For now.
Bloomberg: Biden Spares Russia's Crucial Energy Exports From Sanctions
Russian energy exports escaped sanctions from the U.S. as President Joe Biden toughens restrictions on the country while avoiding measures that could send oil prices surging even further, worsen Europe's gas shortage and make gasoline more expensive for Americans.
Harsher sanctions announced by Biden on Thursday following the invasion of Ukraine included blocking major Russian banks and cutting off the country from semiconductors and advanced technology, but purchasing and selling Russian energy supplies are still allowed.
"In our sanctions package, we specifically designed energy payments to continue. We are closely monitoring energy supplies for any disruption," Biden said from the East Room of the White House. "We have been coordinating with major oil-producing and consuming countries toward our common interest to secure global energy supplies."
But nonetheless, Wall Street Journal: Oil Traders Shun Russian Crude, Fearing Impact of Sanctions
The West hasn't hit Russian oil exports with sanctions. The energy industry is acting as if they are already in place.
Shipping companies are refusing to load tankers with the main grade of Russian crude, known in industry parlance as Urals, traders and shipping executives said. Commodity trading houses, meanwhile, are struggling to get banks to fund cargoes of Urals with letters of credit--a form of trade finance that keeps the wheels of international trade turning. And some refining companies are shunning Russian crude oil they normally would convert into gasoline, diesel and jet fuel.
The lack of demand has weighed on the price of Russian oil. The discount at which Urals is trading to benchmark Brent crude is up to 10 times wider than average in the physical market, traders said. The main risk for shippers, refiners and bankers: taking hold of, or financing, Russian crude oil that gets hit by Western sanctions.
"The key word today is obviously hold off and do not do anything that could backfire in the future," said Hugo De Stoop, chief executive of Euronav, one of the world's biggest tanker owners, in an interview. "At the moment, we're not touching any cargo that's linked to Russia."
IIR's Crude & Products Market Scorecard earlier this week spoke to ...
Hands (being) up in exasperation seems to be the norm as Western nations seek diplomatic means to resolve the Russia-Ukraine crisis. One which could be escalating this week. Meanwhile, some Western leaders could bring their hands together in applause now that a reprised Iran Nuclear Accord is taking shape & place with formality seeming to be reality. While Israeli leaders hold their head in their hands in a frustrated fashion. Similar to those in the States who are attempting & struggling to bring natural gas projects into commission, for many pundits believe natty will be integral to the ever-evolving Energy Transition. And is it not Russia who is weaponizing their energy assets and causing consternation in Europe; while the U.S. regulates theirs to the point that they cannot be a reasonable balance to the Kremlin.
Now many unfortunately hold their heads in their hands just trying to make sense of this world which has seemingly flipped on its axis overnight.
What we do know is that one should not count on OPEC to tame prices if they -- as some expect -- turn around and go back through the $100 psychological level and touch $120 and beyond...
OilPrice: Don't Count On OPEC To Bring Oil Prices Down
...Now, more than ever, there are concerns about oil and gas supply from one of the world's top producers.
Some have compared the situation with the 1973 Yom Kippur war between Israel and a coalition of Arab states. The war led to the Arab oil embargo for the Western world, which led to a sharp and shockingly high rise in prices compared to which this week's $104 for Brent couldn't even compare. In 1973, oil prices practically quadrupled over a few months. This week, they continued on an already established path-- a path that, until today, had little to do with Russia.
A Reuters columnist, George Hay, wrote in a column earlier this week that demand for oil was so strong that prices would have to go further still to start affecting demand in any significant way. Just how high prices would need to go we have yet to see. But he also wrote that this was unlikely to happen because OPEC+ would step in to help.
But an OPEC+ rescue is now looking less likely.
"The oil market is artificially tight. OPEC+ is pumping around 3 million barrels a day less than it could, and most of that spare capacity is held by Saudi Arabia and the United Arab Emirates," Hay wrote. "Both would probably respond to any plea by U.S. President Joe Biden to increase supply to ward off destabilising price spikes."
Stateside inventories rose sharply -- even more so than expectations.
Reuters: U.S. crude stockpiles rise, fuel inventories fall
U.S. crude stockpiles rose sharply, while gasoline and distillate inventories fell last week, the Energy Information Administration said on Thursday.
Crude inventories rose by 4.5 million barrels in the week to Feb. 18 to 416 million barrels, the EIA said, much more than analysts' expectations in a Reuters poll for a 400,000-barrel build.
Crude stocks at the Cushing, Oklahoma, storage hub and delivery point for U.S. crude futures fell by 2 million barrels to 23.8 million barrels in the week, their lowest level since September 2018.
Click on the image at right to see the IIR/DoE Weekly Refinery Report for the Week Ending on February 18.
The Russia-Ukraine conflict has finally boiled over, with Russia launching an attack overnight, causing Brent crude oil, the global benchmark, to surpass $105 per barrel, the highest since July 2014. The Russia attack on Ukraine will have far-reaching implications into Europe, with additional sanctions yet to be identified. The revival of the Iran nuclear deal, which could add additional crude oil into the market, is close to being finalized; however, an agreement could be delayed as a result of the Russia attacks. Stock markets around the world fell sharply overnight as investors seek the safety of fixed-income assets. The stock markets have already been struggling due to record high inflation and the potential of the Fed tightening its policy.
And we know that demand Stateside is at a high.
Click on the image at right to the four-week U.S. product supplied of petroleum products.
Now, one could see gasoline prices going over $4 by April.
CBS News: $4 a gallon gas across U.S. by April? Russia's invasion of Ukraine to drive up prices, experts say
As global markets react to Russia's invasion of Ukraine, American motorists will be paying more for gasoline, but how much more is as uncertain as the outcome of the conflict now underway in Europe. "It's going to get worse here for anyone filling their tank up," Patrick De Haan, an oil and gas analyst at GasBuddy, told CBS MoneyWatch. "You could see motorists paying more as soon as later tonight."
Already at a roughly seven-year high, gas prices could rise five to 10 cents per gallon over the next week, and hit $3.75 in the next 15 to 20 days, according to De Haan. "And it doesn't end there -- motorists are going to get hit by the Russia situation," which coupled with warmer temperatures and a recovering economy could have the national average topping four bucks a gallon by April, he said.
What lies in store in the days ahead...
Reuters: IEA vows to ensure global energy security in wake of Ukraine invasion
The International Energy Agency (IEA) pledged to protect global energy security, the Paris-based watchdog said on Friday, after convening a meeting to discuss Russia's invasion of Ukraine. "Today I convened a meeting to bring together representatives of the IEA's 31 member countries," IEA executive director Fatih Birol said in a statement.
"We reviewed how the Russian invasion has increased concerns among oil market participants against the backdrop of already tight global markets and heightened price volatility."
"We discussed options the IEA could take over the coming days and weeks," he added. Citing the risk of a further escalation, Birol said IEA member countries agreed to continue to act in solidarity to ensure global energy security.
U.S. President Joe Biden said on Thursday the United States is working with other countries on a combined release of additional oil from global strategic crude reserves after international oil prices topped $105.
"This is to ensure all are on the same page on current market conditions" a U.S. source with knowledge of the talks told Reuters, adding that the IEA gathering was separate from talks about coordinated drawdowns of strategic oil reserves.
New York Times: Beyond the Battlefield: What Might Happen Next in the Ukraine Crisis
Europe faces a new refugee crisis, and harsh economic penalties to punish Russia are expected to reverberate worldwide.
Rising energy costs and potentially slowing supply chains will take their toll on consumers. Russian cyberattacks could cripple electronic infrastructure. A new refugee crisis will require international assistance. And an era of relative calm in the West that has pervaded since the end of the Cold War might be coming to a close. ...
The larger question for the rest of the world is whether Mr. Putin's invasion has irrevocably broken international systems in which Russia has been seen as a legitimate contributor. "Last night's events are a turning point in the history of Europe and of our country," President Emmanuel Macron of France said in an address on Thursday morning. "They will have lasting, profound consequences for our lives."
Diplomats representing the Group of 7 of the world's largest industrial nations, NATO, the U.N. Security Council and the European Council were set to meet later on Thursday to plot out the next steps. At the Security Council, the United States urged others to join a resolution condemning Russia's aggressions and defending Ukraine's sovereignty. The effort, which will be put to a vote on Friday, also calls for humanitarian aid to Ukrainian refugees and access for relief workers.
Your feedback is very important to us. Please let us know if we may provide additional color or answer any other market questions you may have by replying to this note.
Additional IIR Resources:
Ask us! We have answers!!
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
Reuters: Oil tops $105/bbl after Russia attacks Ukraine
Oil prices jumped on Thursday, with Brent rising above $105 a barrel for the first time since 2014 before easing, after Russia's attack on Ukraine exacerbated concerns about disruptions to global energy supply. Russia launched an all-out invasion of Ukraine by land, air and sea in the biggest attack by one state against another in Europe since World War Two.
U.S. President Joe Biden unveiled harsh new sanctions against Russia, imposing measures to impede its ability to do business in the world's major currencies along with sanctions against banks and state-owned enterprises.
But oil has since come back down closer to the $90 level.
It seems that in the near term, the sanctions imposed on Russia as well as possible talks between Russia and Ukraine are tempering price as cautious traders weigh all the news hitting the wires.
MarketWatch: Oil edges lower as traders monitor Russia invasion of Ukraine
Crude drifted lower after news reports, citing a summary of a call between Russian President Vladimir Putin and Chinese leader Xi Jinping provided by China's Foreign Ministry, said Russia was ready to conduct negotiations with Ukraine.
On Thursday, oil ended with gains but well off session highs above $100 a barrel, with the pullback tied by analysts to relief that a new round of sanctions announced by the U.S. and its allies against Moscow didn't target Russia's energy exports or cut the country off from the SWIFT payment system.
"This means that energy imports from Russia can still be paid for. The question now is how Russia will respond to the sanctions that have been decided, which will hit the banking sector and the technology industry hardest of all," said Carsten Fritsch, commodity analyst at Commerzbank, in a note.
Though, these sanctions are not yet imposed on Russia energy exports as the western world remains very concerned about supply disruptions in an extremely tight market. For now.
Bloomberg: Biden Spares Russia's Crucial Energy Exports From Sanctions
Russian energy exports escaped sanctions from the U.S. as President Joe Biden toughens restrictions on the country while avoiding measures that could send oil prices surging even further, worsen Europe's gas shortage and make gasoline more expensive for Americans.
Harsher sanctions announced by Biden on Thursday following the invasion of Ukraine included blocking major Russian banks and cutting off the country from semiconductors and advanced technology, but purchasing and selling Russian energy supplies are still allowed.
"In our sanctions package, we specifically designed energy payments to continue. We are closely monitoring energy supplies for any disruption," Biden said from the East Room of the White House. "We have been coordinating with major oil-producing and consuming countries toward our common interest to secure global energy supplies."
But nonetheless, Wall Street Journal: Oil Traders Shun Russian Crude, Fearing Impact of Sanctions
The West hasn't hit Russian oil exports with sanctions. The energy industry is acting as if they are already in place.
Shipping companies are refusing to load tankers with the main grade of Russian crude, known in industry parlance as Urals, traders and shipping executives said. Commodity trading houses, meanwhile, are struggling to get banks to fund cargoes of Urals with letters of credit--a form of trade finance that keeps the wheels of international trade turning. And some refining companies are shunning Russian crude oil they normally would convert into gasoline, diesel and jet fuel.
The lack of demand has weighed on the price of Russian oil. The discount at which Urals is trading to benchmark Brent crude is up to 10 times wider than average in the physical market, traders said. The main risk for shippers, refiners and bankers: taking hold of, or financing, Russian crude oil that gets hit by Western sanctions.
"The key word today is obviously hold off and do not do anything that could backfire in the future," said Hugo De Stoop, chief executive of Euronav, one of the world's biggest tanker owners, in an interview. "At the moment, we're not touching any cargo that's linked to Russia."
IIR's Crude & Products Market Scorecard earlier this week spoke to ...
Hands (being) up in exasperation seems to be the norm as Western nations seek diplomatic means to resolve the Russia-Ukraine crisis. One which could be escalating this week. Meanwhile, some Western leaders could bring their hands together in applause now that a reprised Iran Nuclear Accord is taking shape & place with formality seeming to be reality. While Israeli leaders hold their head in their hands in a frustrated fashion. Similar to those in the States who are attempting & struggling to bring natural gas projects into commission, for many pundits believe natty will be integral to the ever-evolving Energy Transition. And is it not Russia who is weaponizing their energy assets and causing consternation in Europe; while the U.S. regulates theirs to the point that they cannot be a reasonable balance to the Kremlin.
Now many unfortunately hold their heads in their hands just trying to make sense of this world which has seemingly flipped on its axis overnight.
What we do know is that one should not count on OPEC to tame prices if they -- as some expect -- turn around and go back through the $100 psychological level and touch $120 and beyond...
OilPrice: Don't Count On OPEC To Bring Oil Prices Down
...Now, more than ever, there are concerns about oil and gas supply from one of the world's top producers.
Some have compared the situation with the 1973 Yom Kippur war between Israel and a coalition of Arab states. The war led to the Arab oil embargo for the Western world, which led to a sharp and shockingly high rise in prices compared to which this week's $104 for Brent couldn't even compare. In 1973, oil prices practically quadrupled over a few months. This week, they continued on an already established path-- a path that, until today, had little to do with Russia.
A Reuters columnist, George Hay, wrote in a column earlier this week that demand for oil was so strong that prices would have to go further still to start affecting demand in any significant way. Just how high prices would need to go we have yet to see. But he also wrote that this was unlikely to happen because OPEC+ would step in to help.
But an OPEC+ rescue is now looking less likely.
"The oil market is artificially tight. OPEC+ is pumping around 3 million barrels a day less than it could, and most of that spare capacity is held by Saudi Arabia and the United Arab Emirates," Hay wrote. "Both would probably respond to any plea by U.S. President Joe Biden to increase supply to ward off destabilising price spikes."
Stateside inventories rose sharply -- even more so than expectations.
Reuters: U.S. crude stockpiles rise, fuel inventories fall
U.S. crude stockpiles rose sharply, while gasoline and distillate inventories fell last week, the Energy Information Administration said on Thursday.
Crude inventories rose by 4.5 million barrels in the week to Feb. 18 to 416 million barrels, the EIA said, much more than analysts' expectations in a Reuters poll for a 400,000-barrel build.
Crude stocks at the Cushing, Oklahoma, storage hub and delivery point for U.S. crude futures fell by 2 million barrels to 23.8 million barrels in the week, their lowest level since September 2018.
Click on the image at right to see the IIR/DoE Weekly Refinery Report for the Week Ending on February 18.The Russia-Ukraine conflict has finally boiled over, with Russia launching an attack overnight, causing Brent crude oil, the global benchmark, to surpass $105 per barrel, the highest since July 2014. The Russia attack on Ukraine will have far-reaching implications into Europe, with additional sanctions yet to be identified. The revival of the Iran nuclear deal, which could add additional crude oil into the market, is close to being finalized; however, an agreement could be delayed as a result of the Russia attacks. Stock markets around the world fell sharply overnight as investors seek the safety of fixed-income assets. The stock markets have already been struggling due to record high inflation and the potential of the Fed tightening its policy.
And we know that demand Stateside is at a high.
Click on the image at right to the four-week U.S. product supplied of petroleum products.Now, one could see gasoline prices going over $4 by April.
CBS News: $4 a gallon gas across U.S. by April? Russia's invasion of Ukraine to drive up prices, experts say
As global markets react to Russia's invasion of Ukraine, American motorists will be paying more for gasoline, but how much more is as uncertain as the outcome of the conflict now underway in Europe. "It's going to get worse here for anyone filling their tank up," Patrick De Haan, an oil and gas analyst at GasBuddy, told CBS MoneyWatch. "You could see motorists paying more as soon as later tonight."
Already at a roughly seven-year high, gas prices could rise five to 10 cents per gallon over the next week, and hit $3.75 in the next 15 to 20 days, according to De Haan. "And it doesn't end there -- motorists are going to get hit by the Russia situation," which coupled with warmer temperatures and a recovering economy could have the national average topping four bucks a gallon by April, he said.
What lies in store in the days ahead...
Reuters: IEA vows to ensure global energy security in wake of Ukraine invasion
The International Energy Agency (IEA) pledged to protect global energy security, the Paris-based watchdog said on Friday, after convening a meeting to discuss Russia's invasion of Ukraine. "Today I convened a meeting to bring together representatives of the IEA's 31 member countries," IEA executive director Fatih Birol said in a statement.
"We reviewed how the Russian invasion has increased concerns among oil market participants against the backdrop of already tight global markets and heightened price volatility."
"We discussed options the IEA could take over the coming days and weeks," he added. Citing the risk of a further escalation, Birol said IEA member countries agreed to continue to act in solidarity to ensure global energy security.
U.S. President Joe Biden said on Thursday the United States is working with other countries on a combined release of additional oil from global strategic crude reserves after international oil prices topped $105.
"This is to ensure all are on the same page on current market conditions" a U.S. source with knowledge of the talks told Reuters, adding that the IEA gathering was separate from talks about coordinated drawdowns of strategic oil reserves.
New York Times: Beyond the Battlefield: What Might Happen Next in the Ukraine Crisis
Europe faces a new refugee crisis, and harsh economic penalties to punish Russia are expected to reverberate worldwide.
Rising energy costs and potentially slowing supply chains will take their toll on consumers. Russian cyberattacks could cripple electronic infrastructure. A new refugee crisis will require international assistance. And an era of relative calm in the West that has pervaded since the end of the Cold War might be coming to a close. ...
The larger question for the rest of the world is whether Mr. Putin's invasion has irrevocably broken international systems in which Russia has been seen as a legitimate contributor. "Last night's events are a turning point in the history of Europe and of our country," President Emmanuel Macron of France said in an address on Thursday morning. "They will have lasting, profound consequences for our lives."
Diplomats representing the Group of 7 of the world's largest industrial nations, NATO, the U.N. Security Council and the European Council were set to meet later on Thursday to plot out the next steps. At the Security Council, the United States urged others to join a resolution condemning Russia's aggressions and defending Ukraine's sovereignty. The effort, which will be put to a vote on Friday, also calls for humanitarian aid to Ukrainian refugees and access for relief workers.
Your feedback is very important to us. Please let us know if we may provide additional color or answer any other market questions you may have by replying to this note.
Additional IIR Resources:
- IIR Team Email: iirteam@iirenergy.com.
- enelyst oil markets IIR Crude Runs chat
- Latest IIR Crude & Products Market Scorecard
- Latest IIR PCGMI Weekly update video newscast
Ask us! We have answers!!
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
