Oil prices have risen due to ongoing supply disruptions

Friday, September 13, 2024

Hurricane Francine helped oil prices rise after bearish sentiment overwhelmed the market, knocking about 700,000 b/d of oil off the market, if only for a few days. Much of Libyan production remains shut down after UN-brokered talks collapsed, meaning supply disruptions now total 1.5 million b/d. However, with pessimism in China peaking throughout the post-pandemic period, it would take more than supply disruptions to lift Brent above the current price of $73 a barrel.

Hurricane Francine shuts down offshore production. As Hurricane Francine made landfall in Louisiana this week as a Category 2 hurricane, about 42 percent of crude oil production and 53 percent of natural gas production were shut in as a precaution in the U.S. Gulf of Mexico, equivalent to 730,000 b/d and 992 millions. ft³/d.

Saudi Arabia increases Chinese exports. Following an unprecedented surge in demand from Chinese customers in the summer months, the country’s NOC Saudi Aramco is set to increase its deliveries to China in October, with nominations rising to 46 million barrels, up 3 million barrels from September.

Gold hits all-time high on US Fed rate cut promise. The price of gold climbed to an all-time high after U.S. inflation again beat analysts’ expectations, with the combined decline in U.S. Treasury yields and the U.S. dollar sending investors sending the bullion to a record $2,551 an ounce this week.

Scotland’s only refinery confirms closure in 2025. Oil-rich Scotland’s only crude processing plant, the 150,000 b/d Grangemouth refinery, is due to close in the second quarter of 2025 after exactly 100 years of operation, with operator Petroineos looking to redevelop it into a terminal fuel import.

The UAE is investing heavily in the Blue Hydrogen Gigaproject in the US. After months of speculation, the UAE’s national oil company has confirmed its 35% stake in Exxon Mobil’s (NYSE:XOM) Baytown farm, with ADNOC expecting an FID for the world’s largest blue hydrogen project in mid-2025 .

Russia is considering restrictions on the export of uranium and metal. Russian President Vladimir Putin said Moscow would consider curbing exports of uranium, titanium and nickel in retaliation for Western sanctions, sending the three-month LME nickel contract up 3 percent to $16,150 this week.

Related: Does OPEC Still Have Influence on US Oil Markets?

BlackRock invests in Bahrain’s Pipeline Grid. BlackRock’s (NYSE:BLK) Diversified Infrastructure unit has bought a minority stake in a pipeline linking the island state of Bahrain to Saudi Arabia’s oil infrastructure for an undisclosed sum, five years after it bought 40% of the pipeline business of ADNOC for $4 billion.

US refineries suffer minimal damage from the tariff. US refinery supplies from the US Gulf Coast, particularly Louisiana’s 3 million b/d refining capacity, were largely unaffected by Hurricane Francine, with Shell’s Norco and Citgo Lake Charles refineries reporting no damage and returning to operations normal.

Russian crude oil prices fall below the oil price limit. For the first time since January, the free-on-board price of Russia’s main export Ural fell below the G7 price ceiling of $60 a barrel amid freefall in flat prices, which could drive higher use of Greek shipping companies in advance. .

Argentina cuts energy subsidies. Argentina’s reformist Mila government cut energy subsidies in the Latin American nation by $2.7 billion in the first seven months of 2024, with the Energy Ministry claiming the country achieved a $2.9 billion energy trade surplus in January-July.

Uzbekistan begins processing oil produced by the Taliban. Uzbekistan’s Saneg oil refinery has signed a deal with Afghanistan’s Taliban government to start refining rail-delivered Afghan crude at its 40,000 bpd Fergana refinery, with upstream production boosted by Chinese investment in recent years.

Australia launches ambitious hydrogen strategy. Australia’s federal government has launched a new hydrogen strategy targeting 15 million tonnes per year of green hydrogen production by 2050, with a target of less than 0.5 mtpa for 2030, replacing the previous strategy which set no targets of production.

Ultimately, the Detroit refinery was allowed to operate higher. Michigan’s environmental agency has issued a new air permit for the Detroit refinery operated by Marathon Petroleum (NYSE:MPC), allowing the plant to increase production rates, which until now were capped at 140,000 b/d, notably higher if it cuts emissions .

By Michael Kern for Oilprice.com

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