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Energy and commodities highlights: Crude contamination, alternatives to Iranian oil, China shale gas

General Ideas

Supply-side issues continued to preoccupy oil markets at the start of May, after Russian crude exports to Central and Eastern Europe were hit by a contamination problem that caused disruption all along the supply chain.

Problems with crude quality on Russia’s Druzhba (Friendship) pipeline began to emerge on April 18, and the pipe was subsequently shut down. The Czech Republic, Hungary and Poland responded by releasing emergency stocks. Exports from the Ust-Luga terminal on the Gulf of Finland were also disrupted.

By May 2, clean Russian crude was again entering Eastern Europe via Belarus, although a full clean-up to deal with the consequences of the contamination is expected to take months. Although countries in the region have been trying to reduce their dependence on Russian oil, some reliance persists, particularly for landlocked refineries.

Map showing Druzhba crude oil pipeline transiting from Russia via Belarus to Central and Eastern Europe

Click to enlarge


Alongside the Russian supply disruption, oil traders were also considering how the sudden gap in Iranian exports could be filled, after the US decided not to extend sanctions waivers.

Nonetheless, crude oil futures shifted down later in the week, on expectations that the US, Russia and Saudi Arabia would step in, with a build-up of inventories in the US seen as a further bearish driver.

Other producers could also stand to gain from the further restrictions on Iranian exports. S&P Global Platts visualized how alternative suppliers could step in to provide replacement grades with similar characteristics to Iranian types of crude:


Sankey diagram showing how Iranian oil supply to top buyers could be replaced by alnternative origins and grades

Click for full-size infographic



S&P Global Platts reporters Paula Vanlaningham and Robert Perkins tell Joel Hanley the latest on the Russian crude oil contamination scandal, looking at the logistical and price implications.



China to miss 2020 shale gas production targets amid tough upstream conditions

China is likely to miss its 2020 shale gas production target as technical and commercial challenges dog efforts to tap into what are considered the largest shale gas resources outside the US, according to production estimates compiled by market participants.


Venezuela sanctions weigh on US MTBE prices

The sharp dropoff in Venezuela’s purchasing of MTBE, a gasoline blending component, has dragged US prices for the product to multi-year lows relative to other regions.


Panama Canal reduces maximum authorized draft in Neopanamax locks

The Panama Canal Authority has reduced the maximum authorized draft for vessels transiting the Neopanamax locks for the fifth time this year, following a serious drought that has reduced water levels in two of the canal’s largest tributary lakes.


“Nobody I know is looking at subsidizing coal, period.”

US Department of Energy assistant secretary Bruce Walker told reporters April 29 that there is no intention to adopt policies that would specifically support uneconomic coal-fired power plants.


19 Comments on "Energy and commodities highlights: Crude contamination, alternatives to Iranian oil, China shale gas"

  1. anon on Mon, 6th May 2019 2:16 am 

    how surpising that it smells of politics. crude quality? that is the fault of the _pipeline_?
    what, are lighter or heavier fractions leaking through some kind of special holes in the pipes? more like an in-your-face bogus excuse to shut down a pipeline for political purposes, where the nature of the game is so obvious the people playing can just make up any explanation they want and laugh in your face about it.

  2. makati1 on Mon, 6th May 2019 3:15 am 

    Anon, spot on! Lies are the order of the day.

  3. majece majece on Mon, 6th May 2019 6:22 am 

    On you can read a lot about the first year in college. It will help you to achieve success for sure

  4. makati1 on Mon, 6th May 2019 6:24 am 

    For your reading pleasure:

    “The US Desperately Needs a New Secretary of State. Pompeo Doesn’t Understand Article 2 of the Constitution”

    ‘Guns and Butter: War and Militarism Triggers Social Inequality and Poverty”

    “19 Facts About Current US Economic Performance: I Dare You to Tell Me the Economy Is “Booming””

    Swirling down the drain… GO TRUMP! TRUMP IN 2020!

  5. Davy on Mon, 6th May 2019 6:33 am 

    global research dot com is a extremist nutter site makato so it is no wonder you call it reading pleasure. FRAUD

  6. Robert Inget on Mon, 6th May 2019 7:03 am 

    Buffett Bets on Rising Oil Prices

    “If oil goes up you make a lot of money”

    (Don’t ignore the fact WB invested in Chinese
    electric car maker, BYD, at least four years ago)


  7. Robert Inget on Mon, 6th May 2019 9:11 am 

    It rained all Sunday in DC.
    Had it been a sunny spring day, DJT would not have been brooding in the WH but out playing golf.

    IOW’s Chinese/US trade talks would have proceeded peacefully.

    So, I’m gonna blame Global Warming.
    For today’s ‘correction’.
    Go ahead, Republicans, have a laugh with me,
    it won’t kill ya.

  8. Davy on Mon, 6th May 2019 9:29 am 

    For today’s ‘correction”

    Bob, you said yesterday. “Breaking”. “Market crash”

    Now it is a “correction”

    Go ahead lying liberal have a laugh at me

  9. Robert Inget on Mon, 6th May 2019 10:34 am 

    YOU were correct Davy. Asian markets were down only 5%, US AG markets taking a bath.

    Soybean farmers hit hardest.

    What this means? How would you feel working all year for zero pay? Or, going BK because DJT got a hair up his pecker because trade talks that often take a decade, are going too slow for his liking.

    One tweet too many and you are out of business.
    Maybe because of threats on Venezuela, Iran.
    Why on Earth should Iran care if Trump wants to reduce Iran’s exports to ZERO?

    If Iran or Venezuela even tries to export oil, we have a powerful Navy to disrupt that activity. ( a full embargo is tantamount to an act of war) Venezuela can’t do much about it.
    Iran could.

    IMO, Iran may change its nuclear policy as a result of this ’embargo’. Just wait till an Iranian tanker
    gets arrested at sea. Watch, as Iran then sends military to guard tankers.

  10. Davy on Mon, 6th May 2019 11:34 am 

    bob, you are blaming way too much on one man this is why your rants don’t hold water. We know you hate trump but don’t mess with the truth just because your instincts as the resistance say the ends justify the means. Just look at your brother MOBster. What a friggin joke. Months of preaching bullshit that is now all over his face. There are consequences for lying and that is legitimacy

  11. Robert Inget on Mon, 6th May 2019 12:22 pm 

    Bolton Finds Casus Belli.
    (or) Gulf of Tonkin revisited.

    By Edward Wong, Eric Schmitt and Helene Cooper
    May 6, 2019 NYT

    WASHINGTON — Senior American officials said on Monday that new threats by Iran against United States troops in Iraq were behind the sudden deployment of an aircraft carrier strike group and Air Force bombers to the Persian Gulf.

    The White House and Pentagon made the decision after seeing intelligence that showed new activity on the part of Iranian-aligned forces since Friday, said two senior officials who spoke on condition of anonymity.

    Additionally, one official noted new concerns in waterways where Iranian maritime forces operate.

    The officials would not provide specific details about the threat posed by Iranian forces or Iraqi Shiite militias with ties to Tehran’s military. Col. Scott Rawlinson, a spokesman for the American-led military coalition in Iraq, declined to comment.

    The new movement of American military forces was announced by John R. Bolton, the national security adviser, on Sunday night.

    The deployment of the aircraft carrier U.S.S. Abraham Lincoln was intended “to send a clear and unmistakable message to the Iranian regime that any attack on United States interests or on those of our allies will be met with unrelenting force,” Mr. Bolton said in a statement.

    He added that “the United States is not seeking war with the Iranian regime, but we are fully prepared to respond to any attack, whether by proxy, the Islamic Revolutionary Guards Corps or regular Iranian forces.”

    (It would be unAmerican to impeach a president during wartime) the argument goes.

  12. Robert Inget on Mon, 6th May 2019 12:37 pm 

    Repost “Romm”

    Tweets are just tools of communication and delivering news. Tweets with no actions have no impact.

    Last night tweets had important news about tariffs change from 10% to 25% on $200b products in justs a few days plus additional $325b exposed for new tariffs of 25% shortly. So annual tarifs would rise from $20b to $130b.
    The risk is not $130b, much higher – losing trillions in businesses.

    Trump let Chinese know seriously – comply with previously agreed terms and give up on few remaining issues or go home with no business.
    He basically left them with two options:

    China has a choice between losing something and losing huge in a long run, USA – between win small and win huge in a long run.

    If China allows additional $325B tariffs, it could be irrevocable as it would stimulate US firms to move production to USA resulted in huge capital outflow. Once decisions are made, that’d be the end of China. EU would follow.
    China would have to be dealing with millions of lost jobs and abandoned factories in addition to lost investments and capital outflow.

    I know what I would choose. I think chances are Chinese will choose same option. Chinese haven’t cancelled the trip to US as rumored last night. I think they have got the message and are working to minimize the potential damage.

    The oil market seems has figured out that this conflict will not damage demand.
    We have plenty of emerged shorts in both oil and equities last week.
    We had very poor EIA report culminating the string of several.

    But this week traders are focusing o several fundamentals factors:

    – US refinery inputs to rise by 1.5 mm bpd to close to 18 mm bpd at peak times in June-August
    – high probability of OPEC+ cuts extension for another 6 months.
    – Venezuela exports to drop by another 800K bpd to almost zero.
    – Iran exports to drop by 1mm bpd to almost zero
    – Russia’s pipeline contamination resulted in production/export drop by 700K bpd temporarily (nobody knows for how long).

    US production is not expected to rise materially in coming months based on proposed capex and recent rig counts.

    All those factors are ahead of us for various reasons, mostly logistic time.

    My target of $80 In September is still with no change as long as all fundamental reasons listed above are intact. Nobody expected 10 mm bbl build last week (31 mm bbl in 6 weeks).
    Everyone will be surprised I guess if we draw at such blistering pace starting in a few weeks.


  13. boney joe on Mon, 6th May 2019 4:11 pm 

    You’re the most reliable and consistent liar by far, DavyTurd. Dumbass Turd is in no position to criticize others.

    Shut the fuck up, DavySkum POS.

  14. boney joe on Mon, 6th May 2019 4:15 pm 

    DavyTurd busy “farming” today on his fantasy ranch, yet Turd spends 24/7 at posting nonsensical word salad and abusive comments.

    Translation: Liar.

  15. JuanP on Mon, 6th May 2019 6:33 pm 

    another juanpee sock

    boney joe on Mon, 6th May 2019 4:11 pm
    boney joe on Mon, 6th May 2019 4:15 pm

  16. Cloggie on Tue, 7th May 2019 2:36 am 

    Slow-lane Germany.

    Energy transition supporter der Spiegel despairs at the way Germany is developing new technology, only to let others walk away with the results and make billions: Holland, Denmark, Japan.

    Chrome > right-click > translate English

    Power-to-gas, one of the most likely ways to store renewable energy.

    Dutch economics minister on hydrogen:

    Sorry Germany!

  17. Davy on Tue, 7th May 2019 5:08 am 

    “Sorry Germany!”

    OH, now the city state of Holland is usurping the position of EU leadership. LOL, what a chauvinistic lunatic old man. Germany is Europe in regards to the power of wealth. Holland ain’t shit.

  18. Davy on Tue, 7th May 2019 1:11 pm 

    “Electric Fracking Could Take Over The Permian” oil price dot com

    Simonelli announced to investors this week that his company will be forging a new path in fracking by introducing a revolutionary fleet of “electric frack” turbines that will “use excess natural gas from a drilling site to power hydraulic fracturing equipment — reducing flaring, carbon dioxide emissions, people and equipment in remote locations” according to reporting by the Houston Chronicle. During a Tuesday call with investors Simonelli characterized the new strategy as an across-the-board win for their customer base, saying, “We’re solving some of our customers’ toughest challenges such as logistics, power and reducing flare gas emissions with products from our portfolio.” One of these logistical sticking points concerns the high volumes of diesel required to power hydraulic fracking rigs. “Electric frack enables the switch from diesel-driven to electrical-driven pumps powered by modular gas turbine generating units,” Simonelli told investors on this week’s call. “This alleviates several limiting factors for the operator and the pressure pumping company such as diesel truck logistics, excess gas handling, carbon emissions and the reliability of the pressure pumping operation.”

    “These new “electric frack” turbines are a good start. The approximately 500 traditional diesel-powered hydraulic fracking fleets scattered across the U.S. and Canada consume about 20 million horsepower of energy altogether according to calculations by Baker Hughes. This means that there is a massive market–about 15 gigawatts–for electricity generated by using the new gas-fired turbines. Instead of adding new carbon emissions these turbines will be powered with gas that is currently being burned off anyway instead of adding diesel emissions on top of the carbon dioxide from those flares. To date, eight of these groundbreaking “electric frack” fleets have been deployed in the Permian Basin, but if they are as successful as Baker Hughes seems to think they will be, we can expect a lot more in a hurry.”

  19. Burdin Dmitry Yuryevich on Sat, 31st Aug 2019 12:17 pm 

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