Energy, Economy, Oil, Gas: World Review June 2022

Energy, Economy, Oil, Gas: World Review June 2022

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On the 1st of each month, find a world tour of Energies. On the agenda:
– France: Macron announces peak oil for Saudi Arabia
– Europe: Higher, stronger, further
– USA: Ban on limiting pollution from coal-fired power plants
– Russia: Sales to China and India are increasing
– Iran: The nuclear agreement is slipping away
– China: Two nuclear bombers to say goodbye to Joe Biden
– Australia: The country stops its coal exports
– Nigeria: Sharp drop in oil production
– France: The country rediscovers the “No oil, but ideas.”


But in which direction is the oil heading? That’s the right question. Fortunately, it is limited upwards and downwards, because if you had to add left and right, the forecasts would be complicated. In any case, he had nothing to do with the victory of Stephen Curry and his Warriors in the Basketball League, NBA, in the USA.

In London, Brent ended the month at $115.0 ($123.2 at the end of May). On the side of the country where abortion is banned, the New York WTI is leaning towards $106.6 ($117.0 at the end of May).

This version is abridged. For the full version, it’s here

Chart of the month

US liquid gas imports by region.
Europe boosted its imports

Diesel

According to oil agency Rystad Energy: “The loss of Russian refining exports caused a hole of more than one million barrels of oil per day (b/d) of diesel. It will not be easily filled by the rest of the world. High diesel prices will lead to global hyperinflation and hint at a possible contraction in GDP. The destruction of demand may lead to a recession and restore the balance, but it will be a painful experience for consumers.

Well, if you stop here to read the review, your morale will inevitably take a hit. So it is better to continue.

On the side of the Swiss Petroleum Union, guaranteed fuel oil (diesel) stocks for the next 12 months. This finding is likely to haunt the oil lobby. But in general as no one remembers, Martin Stucky does not care. So we put the link for posterity!

US diesel stocks continue their downward trend, falling from 246 million barrels at the start of Russia’s invasion of Ukraine to 217 million barrels currently.

OPEC+

But why did Emmanuel Macron drop a bomb in front of cameras around the world during the G7? Running after Joe Biden, and to be sure to have the spotlight on him, he swung: “The oil production of the United Arab Emirates and Saudi Arabia is approaching their limits. Sheikh Mohammed bin Zayed al-Nahyan said the Saudis can increase by 150,000 bpd. Maybe a little more, but they don’t have huge capabilities for six months.” We suspected the thing and that the peak oil of Arabia was in sight, but the figures were unknown. Thanks Manu!

While extraction quotas of +432,000 b/d per month are planned by OPEC members, many countries are unable to follow and reach the required levels. OPEC is about 2.6 million bpd below its expected output, according to S&P Global, or nearly 3% of global oil demand.

In total, the consultants of Rapidan Energy Group estimate that OPEC+ (with Russia) will only manage to increase its production by 355,000 bpd over the next two months.

That’s tiny compared to the 3 million bpd of oil supply that the International Energy Agency says could be lost from Russia in the second half of the year.

G7

While the team of the greatest of the free world discuss in a luxurious palace in Germany, Russia has knitted agreements in order to redirect the oil productions of Iran and Iraq via Russia and China.

The G7 members are working on new sanctions against Russia, and as so far everything has worked very well, why not continue.

We even come to wonder if the sanctions have a greater impact on the West than on Moscow.

Economy

The World Bank has lowered its global growth estimate to 2.9%. The Swiss National Bank is praised for its rate hike vision. On the other hand, the SNB has completely failed in terms of inflation, a forecast of 1.8% against 3% in reality. And the guys get paid a fortune.

The European Bank is following the American FED and will increase its key rates by 0.25% in July to counter inflation of 8%. Before the Russian invasion, inflation in the Euro zone was 5.9% in January.

One more number, in the fun stuff, since the top of the stock market, we’ve lost $9.3 trillion in market capitalization. During the COVID crash, we had lost $9.8 trillion and regained 18 between the lockdown and the top of the year. Like what, if it continues to fall, one wonders what the monetary injections will have been used for, if not to create inflation out of control.

On the bond side, the loss is $10,000 billion.

Climate

Well, temperatures that exceed 43 degrees in Spain for the month of June, the same in France and the USA, not to mention India and Pakistan.

“The remarkable precocity of this episode is an aggravating factor,” said Météo-France, adding that it was a first since 1947.

Gas

The International Energy Agency has warned that Europe must prepare immediately for a complete shutdown of Russian gas exports this winter. Brussels holds firmly in her hands a knife which has two blades and no handle.

With the shutdown of Russian gas pipelines, charter rates for an LNG carrier for one year are close to their highest level for ten years, at $120,000 per day, an increase of more than 50% compared to the year according to Clarksons Platou Securities.

Shipowners claim that Total has been particularly active in finding LNG carriers to lease for three to five years, a longer period than usual.

Yellowstone Park, USA, drowned in downpours

The 3 countries in the monthly hit parade

Russia

Russia has overtaken Saudi Arabia as the largest oil exporter to China, +55% or 1.98 million barrels per day against 1.5 in May.

Arabia supplies 1.84 million bpd to Beijing. Moscow also became India’s largest oil supplier with 819,000 bpd compared to 277,000 in April. Clearly, part of the 4 million b/d of European oil is in the process of leaving for other horizons and all with discounts of more than $30 a barrel.

Russian gas exports fell 27.6% between January and May compared to 2021 according to Gazprom.

Operations at the Novoshakhtinsky refinery in southern Russia have been suspended after two drone strikes caused a fire and damaged equipment.

Moscow has sharply reduced gas exports to Germany, France and Italy. It’s a bit like Koh-Lanta, never safe from a surprise and it’s always quite funny to see the thing unfold before your eyes. Gas prices immediately climbed to €130 MG from 80 at the start of the month.

Italy is trumpeting from all the rooftops that it is possible to do without Russian gas and supports Ukraine’s entry into Europe and NATO. For Germany, the decline in imports will get stuck. The German Economy Minister asks for energy savings and announces future shortages.

Russia is in default for an unpaid debt. Vladimir has the money to pay, but he is not allowed to use the international banking system.

At least three tankers disappeared from tanker tracking systems as they approached the Azores, a tiny group of islands around 950 miles west of mainland Portugal. They probably transferred their cargoes to other ships. Iran is also accustomed to this strategy in order to circumvent embargoes.

Solar production by country

Iran – Iraq

Both countries in a duo pack.

Indirect talks between the United States and Iran to revive a 2015 nuclear deal have ended in Qatar without result, according to Iran’s semi-official Tasnim news agency. The US is no longer in a hurry to strike a deal as China made a 25-year deal to buy Iranian oil and the Russians are around.

In June, big shuffling of cards, in this strategic oil region. While the G7 countries are talking, behind the scenes things are moving forward.

During the month, Russian Foreign Minister Sergey Lavrov and senior Iranian political and military officials, including President Ebrahim Raisi, met on several occasions.

Lavrov and Raisi discussed expanding cooperation in all areas: including oil and gas and related products, both from Iran to Russia and from Russia to Iran to develop cooperation with the Eurasian region and the Caucasus as well as the possibility that Russia will finally supply Iran with the S-400 missile defense system and the Sukhoi Su-35 fighter jets. Russia has always linked these demands for military hardware from Iran to other of its own security concerns in the Middle East, particularly in Syria, a region in which Iran and Russia collaborate. . Here we see part of the domino.

In Iraq, the removal from the Iraqi parliament of longtime de facto leader Moqtada al-Sadr and his 73-member political bloc. Iraq is back to square one with no clear power figure, which is exactly what Iran and Russia want.

A new roadmap for cooperation between Iran and Iraq. One of the most important methods of assuring power in the Middle East is to consolidate control of the energy distribution network (electricity, oil, gas) It looks a lot like Europe’s dependence on Russia.

China

Cities are coming out of Covid, coal consumption is on the rise again to generate electricity to produce the gadgets that will be bought by Westerners. It’s obviously a shortcut, but it reminds us that we dumped polluting production on China to give us a clear conscience.

Chinese officials have made it clear that “their “One China” policy towards Taiwan is based on the constitutional principle of “peaceful reunification”. War is a measure of last resort, which should only be used to prevent Taiwan’s secession from China or when the possibilities for peaceful reunification have been completely exhausted.

If China had maintained a certain restraint in the face of the war in Ukraine, especially so as not to tickle Washington, things are changing. During a phone call with Vladimir, President Xi “noted the legitimacy” of the measures taken by Russia to protect itself “in the face of the challenges to its security created by external forces”.

Russia has become the largest oil exporter to China ahead of Saudi Arabia. The Kremlin stressed that Mr. Putin and Mr. Xi both agreed that relations between China and Russia are at an “unprecedented level” and that they plan to deepen ties in the fields of energy, finance and industry.

The Chinese army will no longer confine itself to defending itself against a war against China. Starting this month, Chinese troops will be able to carry out missions such as disaster relief, humanitarian assistance, escort and peacekeeping, and safeguard national sovereignty, security and development interests. China.

Beijing could expand tax exemptions on electric car purchases to boost the auto sector,” according to Bloomberg. The government would consider extending the exemptions by about $30 billion. The subsidies were due to end in 2023, but auto sales in China are down 17% year-on-year. As it is necessary to sell to create jobs.

To read more, it’s here

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