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Iran Nuclear Deal Keeps Oil Markets On Edge

·4 min read

Crude oil prices began to slip on Friday after Federal Reserve Chair Jerome Powell spoke for a mere 8 minutes, warning that there would be pain ahead.

Friday, August 26th, 2022 

Oil prices have remained in limbo this week, with ICE Brent trending around $100 per barrel, as the market zoomed in on the prospects of an Iranian deal. As the Biden administration relayed its response to the European Union, acting as a broker between the two sides that refuse to negotiate directly, rumours seem to indicate that the proposed terms fall short of what Tehran expected, effectively creating a “take it or leave it” dilemma for the Iranian leadership. Unless there is any sudden breakthrough on Iran, it will be the Fed’s Jackson Hole symposium driving oil prices.

White House Wants U.S. Refiners to Cut Exports. In a letter sent to the United States’ leading refiners, U.S. Energy Secretary Jennifer Granholm has called upon U.S. refiners to hold back exports to Europe and South America and start building inventories, despite both the gasoline and diesel curves being firmly backwardated.

Iraq Threatens Kurdish Sellers and Buyers. The Iraqi authorities are threatening legal action against anyone who purchases or sells crude from the breakaway region of Kurdistan and its government, using the February decision of the Baghdad Supreme Court as confirmation of Kirkuk sales being “illicit”.

Prelude FLNG Breaks Strike Deadlock. Following an almost two-month hiatus in production, UK energy major Shell (LON:SHEL) has managed to strike a wage deal with the unions of Australia’s 3.6 mtpa Prelude FLNG project, potentially opening up a temporarily idled source of liquefied gas.

Peru Takes Spain’s Repsol to Court. Peru’s consumer protection agency Indecopi is taking Spanish oil company Repsol to court in a $4.5 billion lawsuit, arguing the January oil spill created $3 billion worth of environmental damage and $1.5 billion damages to locals, a claim Repsol rejects, blaming the spill on a volcanic eruption.

Texas Moves to Ban ESG-Aggressive Investors. Texas Comptroller Glenn Hegar claimed the state might ban firms like BlackRock (NYSE:BLK) and a swathe of European banks like Credit Suisse (SWX:CSGN) or BNP Paribas (EPA:BNP) from doing business in the state, as a result of their boycotting investments into the oil and gas industry.

Germany Flags Coal Supply Problems. According to Reuters, the German government has voiced concern over the sustainability of coal supply for power plants along the River Rhine in the autumn as low water levels continue to hinder river navigation and thus slow down coal stocking ahead of winter.

U.S. Majors Find Common Ground with Nigeria. US oil majors ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX) as well as European energy firms Shell (LON:SHEL) and Equinor (NYSE:EQNR) have agreed to end their U.S. lawsuits against Nigeria’s state-controled oil company NNPC after they’ve managed to renew their respective PSA agreements.

Related: Oil Rig Count Climbs As Permian Drilling Picks Up

Japan Comes Full Circle to Back Nuclear Again. The Japanese government will restart more idled nuclear plants (currently there are only seven operating reactors) and consider building new next-generation nuclear capacity, as soaring fuel prices have shifted the country’s public opinion.

Indian Refiner Feels the Russia Sanction Squeeze. Indian refiner Nayara Energy, 49% of which is held by Russia’s state-controlled oil company Rosneft, has seen many leading international banks and oil firms refuse dealing with it for fear of sanctions, most probably nudging it to source even more oil from Russia.

Energy Transfer Clinches Another Offtake Deal. US pipeline operator Energy Transfer (NYSE:ET) signed a deal with UK energy major Shell (LON:SHEL) for the supply of 2.1 million tons of LNG from its proposed Lake Charles LNG plant for 20 years, seeing first deliveries as soon as 2026.

Another Suriname Discovery Buoys Offshore Drillers. U.S. upstream firm Apache (NASDAQ:APA) announced an oil discovery offshore Suriname with its Baja-1 well, encountering light oil in good quality reservoirs, adding to the 180 million-barrel reserve tally of the Krabdagu prospect, drilled this April.

Mexico Sets Up National Lithium Company. Having nationalized all lithium resources back in April 2022, the Mexican authorities have created a state-controlled company (Litio para Mexico) to produce the metal, expected to become operational within the next six months.

Freeport Delays Limit U.S. LNG Export Surge. The 15 mtpa U.S. liquefaction terminal Freeport LNG has delayed its restart target by one month, hoping to resume partial production, shuttered following a June explosion, in early-to-mid-November and reach full capacity exports by March 2023.

French Major Sells Russian Subsidiary. After the French newspaper Le Monde ran a story about TotalEnergies’ (NYSE:TTE) Russian joint venture Terneftegaz selling kerosene to the Russian army, the French major almost immediately sold its stake to its Russian partner Novatek.

By Tom Kool for Oilprice.com

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