Russian Oil Revenues Soar Despite Sanctions

Related stories

[Video] Truck plunges from Lagos bridge, lands on commercial buses 

  A truck on Saturday plunged from the Pen Cinema...

Asean to team up on US tariffs

The Association of Southeast Asian Nations (Asean) has agreed...

Russia-Ukraine War: Trump Weighs in Again, Questions Putin’s Goal on Ending War…

By Olawale Olalekan United States President Donald Trump has expressed...

Tears As Pope Francis Is Finally Buried at Santa Maria Maggiore Basilica

By Abiola Olawole Pope Francis has been laid to rest...

Champions League: How Chelsea Trashed Everton, Secures 3 Points Against Everton in League Push

By Abiola Olawale Chelsea bolstered their Champions League qualification hopes...

1. Gasoline Tightness Becomes Main US Concern

Gasoline

– With the EIA reporting an almost 5-million-barrel stock draw in gasoline over the week ending May 13, with inventories dropping to levels last seen in December and completely ignoring the seasonal build-up trend, gasoline has become the talk of the US market.

– This week brought a long-anticipated breakthrough as even the last states to see gasoline prices below $4 per gallon (Georgia, Kansas, and Oklahoma) have surpassed that threshold and every single US state now sees gasoline prices above the WTI contract.

– At the same time, the backwardation in the gasoline futures remains steep, hindering potential arbitrage inflows from Europe, with the six-month calendar spread around trading $1 per barrel.

– Buoyed by gasoline panic and the Biden Administration’s possible delay of US drilling lease sales, the NYMEX WTI has overtaken ICE Brent for the first time in months.

2. Russian Oil Revenues Are Soaring, Despite Sanctions

Russian oil

– The International Energy Agency reported that the Kremlin has netted approximately $20 billion every single month of 2022 so far, from combined sales of about 8 million b/d of crude and products.

– This implies that despite US/EU sanctions and frequent self-sanctioning amongst Western oil companies dealing with Russia, the primary lifeline of the Putin regime remains firmly in place.

– According to Kpler data, seaborne Russian oil exports reached their second-highest reading on record in April at 3.8 million b/d, more than 500,000 b/d higher compared to outflows in months before the invasion.

– Russia’s 2022 breakeven oil price stipulated in its budget stands at $44.20 per barrel, so even Moscow’s overall fiscal spending remains in positive territory amidst looming sanctions.

3. India Struggles to Overcome Power Shortage Deadlock

India

– With an increasing number of Indians working from home and upending usual power demand patterns, India has found itself with some of the worst blackouts in years amid counterseasonally high temperatures.

– India’s aggregate electricity generation rose by an average of 6.1% year-on-year, with April seeing the largest hikes in both demand and production (some 15% y-o-y).

– With power usage some 20% above pre-pandemic 2020 levels, increased power demand has already lowered available coal stocks to the equivalent of 8 days of consumption.

– The ongoing power shortages have already compelled the Indian government to backtrack on its policy of no thermal coal imports, fast-tracking them as soon as possible, whilst also canceling passenger trains to maximize rail deliveries across the country.

4. Middle East Stocks Decline Amidst Disruptions and Heat

Middle East

– Oil product stockpiles in the UAE port of Fujairah have dropped significantly this week, primarily led by a decline in heavy distillates and residues (down 6.6% week-on-week to 10.34 million barrels).

– Fuel oil inventories have been declining on the back of robust Saudi Arabian buying, a country that routinely relies on HSFO for power generation and has been seeking to avoid direct-burning crude despite the blistering heat recently.

– Despite some growth in Asian gasoline stocks, up 7% week-on-week to 5.7 million barrels, middle distillates continue to fall lower, exacerbating the already tangible tightness across the continents.

– The wider Asian region might see cracks improving even further after the 580,000 b/d Onsan refinery in South Korea saw the eruption of a huge fire that would probably see the refinery shut down.

5. Chinese Coal Production Counters Falling Energy Imports

Coal
Source: NBS.

– China has been increasing domestic coal production to offset declines in coal and LNG imports as a means of safeguarding electricity generators from runaway commodity prices, S&P Global Platts writes.

– Domestic coal output reached an all-time high of 396 million tons in March, before dropping back to 363 million tons last month, squeezing the share of coal imports in the country to a mere 5%.

– China’s LNG imports have dropped by more than 2 million tons LNG compared to same-month arrivals last year, equivalent to a 30% year-on-year decline as spot prices have failed to drop below $20/mmBtu this year.

– Having capped domestic coal prices, the Chinese government recently announced a series of support measures to boost coal power generation and coal production – with coal already accounting for 60% of electricity output, its importance might grow even further.

6. China’s Lockdowns Halt Lithium Bull Run

Lockdown

– China’s zero-COVID policy and subsequent lockdowns have halted the appreciation of lithium prices, with both carbonate and hydroxide prices falling for the first time in more than three years.

– According to Reuters, spot prices for lithium carbonate in China fell to $68,500 per metric ton, a 13% decline vs the March peak of $80,000/mt.

– The thing is that strict lockdowns have limited output rates from EV-producing plants, decreasing short-term demand.

– With lithium poised to see another deficit-ridden year in terms of supply (-80,000 mt vs a shortfall of 65,000 mt last year), lithium carbonate equivalent prices are expected to bounce back almost immediately after China returns to normality.

7. US Oil and Gas Employment Won’t Return to Pre-Pandemic Levels Until 2027

Oil and gas

– Employment in the US oil and gas industry is expected to rebound over the coming years, writes Rystad Energy, though pre-pandemic levels of oil workforce will only be reached by the end of 2027.

– At the peak of the pandemic, the US oil industry shed some 200,000 jobs and now, when higher oil prices are dictating firms to produce more, more than half of those have already been recovered.

– In contrast to previous drilling booms, operators (especially small-to-mid-sized) will be wary of spending their free cash flow on expansion as they prioritize returns and share buybacks.

– By the end of next year, the number of people employed in US oil will surpass 1 million, with average wage growth moving up from the debris of the crisis and averaging 7% between 2022 and 2027.

 

Culled from oilprice.com

Oil Price Editoral Dept
Oil Price Editoral Depthttps://newdiplomatng.com/
At The New Diplomat, we stand for ethical journalism, press freedom, accountable Republic, and gender equity. That is why at The New Diplomat, we are committed to speaking truth to power, fostering a robust community of responsible journalism, and using high-quality polls, data, and surveys to engage the public with compelling narratives about political, business, socio-economic, environmental, and situational dynamics in Nigeria, Africa, and globally.

Subscribe

- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from up to 5 devices at once

[tds_leads input_placeholder="Your email address" btn_horiz_align="content-horiz-center" pp_msg="SSd2ZSUyMHJlYWQlMjBhbmQlMjBhY2NlcHQlMjB0aGUlMjAlM0NhJTIwaHJlZiUzRCUyMiUyMyUyMiUzRVByaXZhY3klMjBQb2xpY3klM0MlMkZhJTNFLg==" pp_checkbox="yes" tdc_css="eyJhbGwiOnsibWFyZ2luLXRvcCI6IjMwIiwibWFyZ2luLWJvdHRvbSI6IjQwIiwiZGlzcGxheSI6IiJ9LCJwb3J0cmFpdCI6eyJtYXJnaW4tdG9wIjoiMTUiLCJtYXJnaW4tYm90dG9tIjoiMjUiLCJkaXNwbGF5IjoiIn0sInBvcnRyYWl0X21heF93aWR0aCI6MTAxOCwicG9ydHJhaXRfbWluX3dpZHRoIjo3NjgsImxhbmRzY2FwZSI6eyJtYXJnaW4tdG9wIjoiMjAiLCJtYXJnaW4tYm90dG9tIjoiMzAiLCJkaXNwbGF5IjoiIn0sImxhbmRzY2FwZV9tYXhfd2lkdGgiOjExNDAsImxhbmRzY2FwZV9taW5fd2lkdGgiOjEwMTksInBob25lIjp7Im1hcmdpbi10b3AiOiIyMCIsImRpc3BsYXkiOiIifSwicGhvbmVfbWF4X3dpZHRoIjo3Njd9" display="column" gap="eyJhbGwiOiIyMCIsInBvcnRyYWl0IjoiMTAiLCJsYW5kc2NhcGUiOiIxNSJ9" f_msg_font_family="downtown-sans-serif-font_global" f_input_font_family="downtown-sans-serif-font_global" f_btn_font_family="downtown-sans-serif-font_global" f_pp_font_family="downtown-serif-font_global" f_pp_font_size="eyJhbGwiOiIxNSIsInBvcnRyYWl0IjoiMTEifQ==" f_btn_font_weight="700" f_btn_font_size="eyJhbGwiOiIxMyIsInBvcnRyYWl0IjoiMTEifQ==" f_btn_font_transform="uppercase" btn_text="Unlock All" btn_bg="#000000" btn_padd="eyJhbGwiOiIxOCIsImxhbmRzY2FwZSI6IjE0IiwicG9ydHJhaXQiOiIxNCJ9" input_padd="eyJhbGwiOiIxNSIsImxhbmRzY2FwZSI6IjEyIiwicG9ydHJhaXQiOiIxMCJ9" pp_check_color_a="#000000" f_pp_font_weight="600" pp_check_square="#000000" msg_composer="" pp_check_color="rgba(0,0,0,0.56)" msg_succ_radius="0" msg_err_radius="0" input_border="1" f_unsub_font_family="downtown-sans-serif-font_global" f_msg_font_size="eyJhbGwiOiIxMyIsInBvcnRyYWl0IjoiMTIifQ==" f_input_font_size="eyJhbGwiOiIxNCIsInBvcnRyYWl0IjoiMTIifQ==" f_input_font_weight="500" f_msg_font_weight="500" f_unsub_font_weight="500"]

Latest stories

Latest News
[Video] Truck plunges from Lagos bridge, lands on commercial buses Asean to team up on US tariffsRussia-Ukraine War: Trump Weighs in Again, Questions Putin’s Goal on Ending War...Tears As Pope Francis Is Finally Buried at Santa Maria Maggiore BasilicaChampions League: How Chelsea Trashed Everton, Secures 3 Points Against Everton in League Push"How I stole Over N6billion", Osun Monarch, Apetu of Ipetumodu, Pastor Plead Guilty to Fraud in USRivers Crisis: There'll Only Be Peace If... Wike Gives TermsAlleged CBEX N1.3 Trillion Scam: EFCC Escalates Fight Against Fraudsters, Declares Eight Persons WantedUK Deports 43 Immigration Offenders to Nigeria, Ghana in Latest Crackdown‘I Remain Committed to LP, No Plans to Join APC’ – Otti Quells Defection Rumors[PHOTOS] Trump, Macron, Zelensky, Javier Milei, Keir Starmer, Other World Leaders Attend Pope Francis’s Funeral At the Vatican CityWike vs Douye Diri: Chaos As Gunshots Disrupt Pro-Wike Rally In BayelsaTribunal Verdict: WhatsApp Challenges FCCPC’s $220m Fine, Seeks Stay Of OrderHow 1,300 Nigerians Secured US Asylum In 3 Years -- EOIRNigeria’s Banking and Financial Services Sector in 2030
X whatsapp