China added some downward pressure to oil prices this week when it clearly signaled its intent to buy more discounted Russian oil. Between China and India, Russia is racing to pivot towards Asia as the EU attempts to ditch its oil.
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Up until now, it has been India whose purchases of heavily discounted Russian crude kept the markets guessing whether Moscow could pull off a comprehensive pivot to Asia. Yet this week, it was China making headlines, with Beijing launching direct government-to-government talks on buying discounted crude to ‘replenish strategic stocks’. This, despite the prospect of an impending Chinese reopening, added some downward pressure to oil prices as ICE Brent trended around $112 per barrel by Friday.
EU Launches $220 Billion Drive to Ditch Russian Fossil Fuels. The European Commission 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 for energy savings and heat pumps.
US to Ease Sanctions on Venezuela. The Biden Administration plans to allowEuropean companies still operating in Venezuela to divert more oil to the continent, while US oil major Chevron (NYSE:CVX) will be allowed to negotiate a resumption of activities in the Latin American country.
Moscow Says Tariffs to Trigger Higher Prices. Russia’s top authorities claimed that the US proposal to slap tariffs on Russian oil will result in buyers having to pay more as the cost of the tariff would be priced into the final price.
UN Calls for Global End to Fuel Subsidies. UN Secretary General Antonio Guterres urged all governments to end fossil fuel subsidies, which have climbed to $500 billion globally, seeking to ramp up pressure on polluters ahead of the COP27 climate conference in Egypt in November.
ADNOC Announces Largest Discoveries of the Year. The UAE national oil company ADNOC announced three oil discoveries totaling 650 million barrels, with the largest expanding the reserve tally of the onshore Bu Hasa field by 500 million barrels, meaning there might be even more Murban exports 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 start buying additional supplies of crude that would be used to replenish China’s strategic inventories.
Occidental Moves into Offshore Colombia Blocks. Colombia’s state-controlled oil firm Ecopetrol (NYSE:ECO) announced it is teaming up with US oil major Occidental (NYSE:OXY) to develop four deepwater blocks in offshore Colombia, with the latter serving as the blocks’ operator.
Shell’s Offshore Brazil Wildcats Fails to Impress. Three exploration wells drilled by UK oil major Shell (LON:SHEL) in three offshore blocks in Brazil, costing it more than $1 billion, all turned out to be dry, another setback for the country after Exxon’s failed $1.6 billion drilling drive.
ADNOC to Build New Giant LNG Facility. The UAE national oil company ADNOC announced it would build a new LNG facility at Fujairah with a capacity of 9.6 million tons per year, more than doubling the country’s current 5.8 mtpa capacity once the planned liquefaction plant comes onstream in 2027.
Iron Ore Soars on China Mortgage Rate Cut. With China unexpectedly lowering the 5-year loan prime rate by 15 basis points to 4.45%, iron ore futures in China rosemarkedly amidst hopes for a quicker-than-expected revival in construction activity, with the June contract rising by 6% today to $127/mt.
ExxonMobil Sells Barnett Shale Assets for $750 Million. In a widely anticipated move, US oil major ExxonMobil (NYSE:XOM) sold its Barnett shale gas assets to Thai-owned producer BKV Corp for $750 million, well above last year’s assessment of $500 million thanks to a higher natural gas price environment.
Iraq Seeks Legal Move to Bring Kurdistan Under Control. The Iraqi oil ministry has reportedly appointed law firm Cleary Gottlieb Steen and Hamilton to approach oil and gas firms active in Iraqi Kurdistan to renegotiate their contracts and bring them in line with applicable Iraqi law, bypassing the KRG.
Half of Russia’s Gas Buyers Open New Bank Accounts. Russia’s deputy prime minister stated that half of Gazprom’s (MCX:GAZP) European gas buyers have opened accounts at Gazprombank in foreign currency and in roubles, 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 operating in Mexico, according to the country’s president AMLO, having named officials that allegedly received bribes over the 2015-2020 period and probably also paying the $30 million in damages.
By Tom Kool for Oilprice.com
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Tom Kool
Tom majored in International Business at Amsterdam’s Higher School of Economics, he is Oilprice.com's Head of Operations
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