Hopes of a Gaza Ceasefire Are Putting Oil Prices Under Pressure

Image Credit: theguardian.com

March 22, 2024/Oilprice

Tom Kool
Editor, Oilprice.com

Renewed hopes of a ceasefire in Gaza and U.S. efforts to halt Ukrainian attacks on Russian refineries have added some downward pressure to oil prices. Despite this downward pressure, bullish sentiment continues to build in oil markets.

Friday, March 22nd 2024

A potential ceasefire in Gaza is back on the agenda again, creating some downward momentum for ICE Brent as it slid back to $85 per barrel, whilst reports of the US urging Ukraine to halt strikes on Russian refineries will most probably curb another facet of geopolitical risk. Despite the downward correction, outlooks for the year keep on getting increasingly bullish with the EIA lifting its Brent forecast to $88 per barrel, up 4$ per barrel from last month.

TMX Starts Line Fill and Sells Its First Cargo. As line fill of Canada’s Trans Mountain Expansion pipeline is moving ahead, the first-ever cargo of Access Western Blend from TMX was bought by China’s refiner Sinochem, reportedly at a $5 per barrel discount to Brent on a delivered China basis.

Gold Hits All-time High. For the first time on record, the price of gold surpassed $2,200 per ounce this week after the US Federal Reserve stated it would seek to carry out three interest rate cuts this year despite inflation not dropping to the target rate of 2%, boosting the bullion’s safe-haven merits.

Two Freeport LNG Trains Down Until May. Freeport LNG said that liquefaction Train 2 has been down and Train 1 will be taken down imminently to carry out inspections that would last until May, saying the January cold snap damaged Train 3 motors, prompting the operator to check other trains as well.

CNOOC Joins the Battle for Hess’ Guyana Assets. Not wanting to be left out, China’s offshore-focused oil major CNOOC (HKG:0883) has started arbitrating proceedings at the International Chamber of Commerce, claiming it wants to exercise its right of first refusal over Hess’ stake in the Stabroek block.

16 States Sue the Federal Government. Sixteen US states including Texas, Louisiana and Florida have taken the federal government to court over the Biden administration’s freeze on approving applications for new LNG terminals, arguing the White House lacks the authority to outright deny new permits.

Saudi Aramco Becomes More Gassy. Saudi Arabia’s national oil company Saudi Aramco (TADAWUL:2222) will increase gas production by 60% by 2030, simultaneously developing its own shale gas fields at home and investing in LNG projects abroad.

Nigeria Reverses Scrapping of Fuel Subsidies. The reformist government of Bola Tinubu has partially reversed its decision to abandon fuel subsidies as fuel and electricity prices were capped recently amidst soaring inflation across the country, with the IMF warning this might cost Lagos up to 3% in GDP this year.

Suriname Fosters Cooperation Between Majors. Suriname’s state-owned oil firm Staatsolie has started talks with oil majors ExxonMobil (NYSE:XOM) and TotalEnergies (NYSE:TTE) to have them jointly develop natural gas fields straddling the border between Guyana and Suriname to cut capital costs.

Biden Tries Again with Wind Auction. Despite seeing only one bid during the inaugural US offshore wind development right auction in the Gulf of Mexico eight months ago, the White House has proposed a second licensing round to be held as soon as this year, offering 410,060 acres offshore Louisiana and Texas.

LNG Price Drop Triggers Buying Bonanza. Asian LNG prices have dropped to their lowest levels since April 2021, currently around $8.60 per mmBtu, prompting price-sensitive buyers in China and India to boost their imports with both countries expected to grow their LNG imports by more than 10% in 2024.

China Reduces Imports of Russian Coal. China’s reimposition of import levies on coal has sent Russian coal exports to the Asian powerhouse down 22% year-on-year to 11.5 million tonnes over January-February, although Indonesia managed to maintain its pace of supplies thanks to a free-trade deal.

Republican Senators Attack the IEA. Senior US Republican senators attacked the IEA, accusing it of becoming an “energy transition cheerleader” that undermines energy security by actively discouraging investment into oil and gas and calling for full disclosure of the US’ funding of the organization.

No Frontier-Opening Discoveries in Egypt. The offshore exploration well Orion-1X, spudded by Italy’s oil major ENI (BIT:ENI) in Egypt, has turned up dry, quashing hopes that it could open up a new drilling frontier in the Eastern Mediterranean and boost Egypt’s portfolio of offshore gas fields.

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