Oil Price - May 14
Posted: Mon May 14, 2018 8:42 am
WTI opened the week slightly higher as traders sort through a lot of issues that will impact the global oil market. One thing is for sure - a surge in demand for transportation fuels is just a few weeks away. Traders are eager to see this month's Oil Market Report from IEA, which will be released this week. < The IEA's "Oil Market Report" for May is scheduled to be released before the markets open on Wednesday, May 16. It will be a "market mover". EIA will also release their weekly oil supply/demand report on Wednesday.
Iran pumps about 4% of the world's oil and exports about 450,000 b/d of crude to Europe, according to tanker-tracking data.
On 5/11/2018, Reuters reported European oil companies are not ruling out reducing Iranian oil imports after the threat of new U.S. sanctions, with some expecting banking issues to hinder trade, but there was no rush to immediately cut volumes. U.S. President Donald Trump said on Tuesday, May 8 that the U.S. was exiting an international nuclear deal with Iran and would impose new sanctions that seek to reduce oil exports from OPEC's third-largest producer.
The U.S. sanctions have a 180-day period during which buyers should "wind down" oil purchases, meaning any loss of supply will not be immediately felt - and companies don't have to rush to find alternatives. The bulk of Iran's crude exports, about 1.8 million b/d, go to Asia. Sources at global trading companies predicted an imminent drop in Iranian exports due to banking issues, such as availability of trade finance. A senior trader with another company said he expected banking to pose a major problem to Iranian oil trade and a third said even if waivers are granted, volumes would still decline. "Waivers seem a sensible course of action," the third source said, referring to potential exemptions from the latest U.S. sanctions.
On 5/10/2018, Reuters reported OPEC is in no hurry to decide whether to pump more oil to make up for an expected drop in exports from Iran after the imposition of new U.S. sanctions, four sources familiar with the issue said, saying any loss in supply would take time. OPEC officials are considering whether a drop in Iranian exports and a decline in supply from another OPEC member, Venezuela, demands adjusting the deal that runs to the end of 2018. Ministers meet in June to review the policy. "It's too early to know now the impact," said a third OPEC source. "We need to wait and see what China will do, what Japan will do. Who will buy Iranian oil and who will side with Trump." Oil ministers from OPEC and its partners meet on June 22-23 in Vienna to review the existing agreement. Before that, technical officials meet in Jeddah, Saudi Arabia, on May 22-23 when the issue of whether extra barrels are needed to offset any Iranian loss will likely come up, the second source said.
On 5/11/2018, Reuters reported Venezuela's state-run oil company PDVSA is preparing to shut a Caribbean refinery that is running out of crude amid threats by ConocoPhillips (COP-NC) to seize cargoes sent to resupply the facility, according to two sources with knowledge of the situation. Conoco last week began legal actions in the Caribbean to enforce a $2 billion arbitration award by the International Chamber of Commerce (ICC) over the 2007 nationalization of its projects in Venezuela. The moves have disrupted fuel deliveries throughout the Caribbean, much of which depends on PDVSA. The PDVSA-operated 335,000 barrel-per-day Isla refinery in Curacao, which has not received new shipments from PDVSA since last week, plans to exhaust existing inventories in the coming days, the two sources said.
Iran pumps about 4% of the world's oil and exports about 450,000 b/d of crude to Europe, according to tanker-tracking data.
On 5/11/2018, Reuters reported European oil companies are not ruling out reducing Iranian oil imports after the threat of new U.S. sanctions, with some expecting banking issues to hinder trade, but there was no rush to immediately cut volumes. U.S. President Donald Trump said on Tuesday, May 8 that the U.S. was exiting an international nuclear deal with Iran and would impose new sanctions that seek to reduce oil exports from OPEC's third-largest producer.
The U.S. sanctions have a 180-day period during which buyers should "wind down" oil purchases, meaning any loss of supply will not be immediately felt - and companies don't have to rush to find alternatives. The bulk of Iran's crude exports, about 1.8 million b/d, go to Asia. Sources at global trading companies predicted an imminent drop in Iranian exports due to banking issues, such as availability of trade finance. A senior trader with another company said he expected banking to pose a major problem to Iranian oil trade and a third said even if waivers are granted, volumes would still decline. "Waivers seem a sensible course of action," the third source said, referring to potential exemptions from the latest U.S. sanctions.
On 5/10/2018, Reuters reported OPEC is in no hurry to decide whether to pump more oil to make up for an expected drop in exports from Iran after the imposition of new U.S. sanctions, four sources familiar with the issue said, saying any loss in supply would take time. OPEC officials are considering whether a drop in Iranian exports and a decline in supply from another OPEC member, Venezuela, demands adjusting the deal that runs to the end of 2018. Ministers meet in June to review the policy. "It's too early to know now the impact," said a third OPEC source. "We need to wait and see what China will do, what Japan will do. Who will buy Iranian oil and who will side with Trump." Oil ministers from OPEC and its partners meet on June 22-23 in Vienna to review the existing agreement. Before that, technical officials meet in Jeddah, Saudi Arabia, on May 22-23 when the issue of whether extra barrels are needed to offset any Iranian loss will likely come up, the second source said.
On 5/11/2018, Reuters reported Venezuela's state-run oil company PDVSA is preparing to shut a Caribbean refinery that is running out of crude amid threats by ConocoPhillips (COP-NC) to seize cargoes sent to resupply the facility, according to two sources with knowledge of the situation. Conoco last week began legal actions in the Caribbean to enforce a $2 billion arbitration award by the International Chamber of Commerce (ICC) over the 2007 nationalization of its projects in Venezuela. The moves have disrupted fuel deliveries throughout the Caribbean, much of which depends on PDVSA. The PDVSA-operated 335,000 barrel-per-day Isla refinery in Curacao, which has not received new shipments from PDVSA since last week, plans to exhaust existing inventories in the coming days, the two sources said.