Oil prices climbed on Tuesday morning following a drone attack on a key Russian oil pipeline. At the same time, the prospect of a Russia-Ukraine peace deal is limiting the upside for oil prices as it could ultimately lead to a flood of Russian crude to the market.
– Europe’s wind generation posted a whopping 16% year-over-year decline, triggering a largely unexpected squeeze on natural gas inventories, however despite huge wind park buildouts globally climate change could make wind generation less efficient over the upcoming years.
– The amplified warming of both land and troposphere, known as wind ‘stilling’, is expected to result in wind speeds slowing down across northern mid-latitude regions such as North America and Europe by some 4-5% between 2021 and 2050.
– With typical lifespans of 20 years, the efficiency of wind turbines in converting wind into electricity tends to be between 30% and 40%, with the Betz Limit setting the theoretical maximum efficiency at 59% (gas combined cycle power plants operate with efficiencies over 60%).
– According to recent studies, the Arctic has been warming four times faster than the tropics over the past 50 years, with the relatively smaller temperature differences triggering weaker winds, further aggravated by increasing ‘surface roughness’ coming from urbanization.
– US shale oil firm Diamondback Energy (NYSE:FANG) agreed to buy parts of EnCap-backed oil producer Double Eagle IV for $4.08 billion, adding some 40,000 net acres in the core of Midland.
– Brazil’s state oil firm Petrobras (NYSE:PBR) reported a new oil discovery to the west of the Buzios field, drilling to a pre-salt depth of 5,600m and adding to the oil field’s 11.3 billion boe reserves tally.
– US oil major Chevron (NYSE:CVX) has finally received government approval for its $4 billion Aphrodite gas project in offshore Cyprus, opting for a floating production facility and a gas pipeline to Egypt.
Ukraine’s drone strikes on Russian pipeline infrastructure, somewhat ironically carrying Kazakh crude oil to the Black Sea, have set a bullish tone for this week as the Monday settlement of ICE Brent climbed back above $75 per barrel. However, there seems to be no upside beyond that as US-Russia negotiations on a potential end to the Ukraine conflict could de-risk Russian supply over the upcoming months.
Drone Attacks Disrupt Kazakhstan Production. A Ukrainian drone attack damaged a pumping station on the CPC pipeline that carries Kazakh crude oil through the territory of Russia, with the operator suggesting some 400,000 b/d of production would need to be cut for the next 1-2 months.
Ukraine Rejects US Rare Earths Bid. According to the Financial Times, Ukraine has rejected a bid by the Trump administration for the US to own 50% of the country’s rare earth minerals, with Kyiv saying any US and European guarantees need to be tied directly to mineral resource deals.
US Fund Builds Up Italian Biofuels Stake. Global equity fund KKR (NYSE:KKR) signed an agreement with Italian oil major ENI (BIT:ENI) to buy an additional 5% stake in the company’s biofuel business Enilive for $615 million, bringing its total stake to 30% in the new venture that’s valued at $13 billion.
South Africa Flaunts Russian Nuclear Investment. Amidst a deepening rift between South Africa and the United States, the South African government announced its plans to add 2.5 GW of nuclear capacity to tackle the country’s electricity outages, leaving the door open for Russian bids.
LNG Carriers Return to the Red Sea. For the first time since the Houthis’ maritime offensive started in October 2023, a non-Russian LNG carrier braved a Red Sea transit with the unloaded Liberian-flagged Trader III ship moving to Asia after discharging a cargo in Turkey.
Kurdish Export Resumption Back on the Agenda. Iraq’s Oil Ministry stated that oil exports from Iraqi Kurdistan could resume as soon as next week, but Baghdad’s ongoing $1.5 billion arbitrage with Turkey and Baghdad’s shaky OPEC+ compliance could derail the return of that 300,000 b/d of oil.
Japanese Companies Want More US LNG. Australia’s energy firm Woodside Energy (ASX:WDS) has reportedly held talks with Tokyo Gas, JERA, and Saudi-backed MidOcean Energy to sell 50% of the first phase of its 27.6 mtpa Louisiana LNG project, expected to cost around $16 billion to build.
Venezuelan Production to Hit 7-Year Highs. President Trump’s constructive attitude vis-a-vis Caracas has allowed Venezuelan output to rally, led by Chevron’s (NYSE:CVX) projects as Petropiar is set to reach 143,000 b/d in output this month whilst Petroboscan climbed to 101,000 b/d.
European Diesel Prices Signal Tightness. Europe’s ICE gasoil diesel futures hit the steepest backwardation since March 2024, with the M1-M2 spread rising to $14 per metric tonne as the March contract trades around $720/mt, prompted by tight US diesel stocks and cargo divertions there.
Iraq Eyes First Ever LNG Import Terminal. The government of Iraq plans to build its first LNG import terminal in Basrah, with a 40km pipeline set to connect it to the country’s power grid, a move prompted by a recent halt in Tehran’s gas deliveries to Iraq amidst higher Iranian domestic demand.
Glencore Rejects Congo Takeover Bid. Global trading firm Glencore (LON:GLEN) disclosed that it had rejected an unsolicited approach for its mining operations in the Democratic Republic of Congo at the end of 2024, with rumors suggesting Middle Eastern buyers would be keen to expand there.
Algeria Pushes Back 2025 Bid Round. Algeria’s hydrocarbon regulator Alnaft has extended the deadline for its 2025 licensing round by three months to 17 June, allegedly to allow companies that expressed interest late to submit their bids with 5 out of 6 offered blocks containing gas discoveries.
Nigeria Boasts of Lower Oil Theft. Nigeria’s upstream regulator said that oil production losses from theft have plunged to less than 5,000 b/d, a mere fraction of the 150,000 b/d that was siphoned off from producers back in 2018, claiming some 1,861 illegal pipeline connections were removed last year.
• None Russia Claims to Be Fully Compliant with OPEC+ Output Quota
• None Oil Prices Drop as Hamas Recommits to the Ceasefire Deal