Why global oil prices are falling

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An apparent breakthrough in peace talks between Russia and Ukraine has provided oil markets with some much-needed bearish news. Just after European countries had walked back threats of sanctioning Russian oil, Russia promised to scale down military operations in the north of Ukraine. The promise from Russia has sparked hope that the war in Ukraine may finally begin to deescalate. Meanwhile, China’s zero-COVID strategy has led to more lockdowns, lockdowns that are likely to reduce demand for the Asian giant. WTI is threatening to fall back below $100 on the news, although oil markets still remain tight.

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OPEC Warns Against the Politicization of Supply. In a thinly veiled riposte to the IEA, OPEC heavyweights Saudi Arabia and UAE warned against politicizing oil supply issues, arguing that squeezing any member out of the alliance would only increase prices and hit customers even harder.

Chinese Independents Hit by Double Whammy. Already under stress from increasing government interference, China’s COVID lockdowns, including but not limited to the closure of Shanghai, are forcing teapot refiners to sell off their April-delivery cargoes, with selling limited to state-owned refiners due to destination restrictions.

Rouble Gas Payment Battle Looms on the Horizon. G7 nations have rejected demands from Russia’s President Vladimir Putin that ‘unfriendly’ countries pay for Russian gas with roubles, setting the stage for a seemingly prolonged battle as Putin has given an end-March deadline to his government on changing the pricing terms.

Chevron Cuts Kazakh Production on Port Issues. US oil major Chevron (NYSE:CVX) reduced production rates at the largest oil field in Kazakhstan, Tengiz, after only one out of three single point moorings of the CPC terminal remains operable, the other two will provisionally take 3-4 weeks to repair.

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US to Slap Tariffs on Southeast Asian Solar Imports. US trade officials said they will launch an investigation into solar imports from Malaysia, Thailand, Vietnam, and Cambodia as Chinese producers have shifted production to these countries to avoid paying US duties.

Iran Strike a Warning Sign to Kurdish Gas Plans. According to media reports, Iran attacked Iraq’s Kurdistan region earlier this month in order to warn Kurdish officials that started talks with Israeli and US energy officials to ship Kurdish natural gas to Turkey via a new gas pipeline.

Bolsonaro Replaces Petrobras CEO. Brazilian President Jair Bolsonaro decided to fire Joaquim Silva e Luna, CEO of state-controlled oil company Petrobras (NYSE:PBR), on the back of surging transportation fuel prices in the country, tapping market-oriented academic Adriano Pires for the role.

India Wants Russian Coking Coal. With India becoming by far the largest buyer of spot Russian crude cargoes, Delhi now wants to double down on imports of coking coal from Russia in a departure from pre-2022 developments. Indian steel producers had previously relied overwhelmingly on Australian supplies.

Spain and Portugal Receive Waiver to Cap Prices. The European Commission clearedSpain and Portugal to cap their power prices in a departure from classic non-interventionist EU policy, limiting the wholesale price at €180 per MWh, apparently due to the two countries’ high share of renewables in power generation.

Colombia Greenlights Fracking Pilot. The Colombian government approved the environmental permit for the Kale fracking pilot project in the Middle Magdalena Basin, led by Ecopetrol (NYSE:EC), amidst increasing pressure from environmental groups as they want the country’s high court to ban the practice.

Orsted Sells 50% Stake in World’s Biggest Offshore Wind Farm. Danish renewables company Orsted (CPH:ORSTED) agreed to sell half of the 1.3 GW Hornsea 2 offshore wind project in the United Kingdom to a French consortium comprising insurer AXA and banking giant Credit Agricole (25% each).

Ukraine Peace Promise Pushes Aluminium Back. The apparent progress in Russia-Ukraine peace talks took the steam out of aluminum’s month-long spike, dropping more than 5% on Tuesday alone with LME three-month prices dropping to $3,400 per metric tonne.

Gasoil Storage Has Never Been This Cheap. In a desperate attempt to incentivize oil companies to ramp up gasoil stocks, storage companies in the ARA region dropped storage fees to a historical low of €1.5-2.0 per cubic meter, yet even with this Europe remains counter seasonally tight and undersupplied.

-OilPrice.com

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