How far can crude oil prices plunge?

We are of the view that crude oil price may fall below US$60 per barrel, if production in countries like Libya, Iraq, Iran and Venezuela rise to normal. Sanctions on Russia and Iran are also there to avoid glut. We have the convictions that unrest in some of the African countries is there to avoid fall of crude oil price below US$50 per barrel  

Brent crude futures fell below US$70 a barrel on Tuesday for the first time since December 2021, after OPEC Plus revised down its demand forecast for this year and 2025.

Brent crude futures were traded at US$69.51 a barrel and US West Texas Intermediate (WTI) crude slipped to US$66.21. On Monday, both benchmarks had risen about 1%.

On Tuesday, the Organization of the Petroleum Exporting Countries (OPEC) in a monthly report said world oil demand will rise by 2.03 million barrels per day (bpd) in 2024, down from last month's forecast for growth of 2.11 million bpd. Until last month, OPEC had kept the forecast unchanged since it was first made in July 2023.

OPEC also cut its 2025 global demand growth estimate to 1.74 million bpd from 1.78 million bpd. Prices slid on the weakening global demand prospects and expectations of oil oversupply.

On Monday, Chinese data showed consumer inflation accelerated in August to its fastest in half a year, though domestic demand remained fragile, and producer price deflation worsened.

Data released on Tuesday showed China's exports grew in August at their fastest in nearly 1-1/2 years, yet imports disappointed with domestic demand depressed.

“If we lose China this market is going to have a problem because OPEC just cannot cut enough to offset the US and Brazilian position, and some of the other reservoirs at work,” said John Kilduff, partner at Again Capital.

 

European energy crisis may be back soon

According to the Financial Trend Forecaster, European natural gas prices soared almost 40% on the risk of a global liquefied natural gas shortage. European wholesale power prices remain below the record highs of the energy crisis but have steadily climbed as the volatility in the international commodity spectrum underscores the fragility of the European energy system.

Unfortunately, the European Union bureaucrats declared the end of the energy crisis as if it were the result of decisive policy action, but the reality is that the energy problem in the EU was only diminished by purely external factors: a very mild winter and the decline in global commodity prices due to the central bank rate hikes. Thus, the energy crisis remains, and the problems of security of supply and affordability of the system persist.

The European Union’s dependency on Russian gas has not been solved; it has only been disguised by a massive increase in dependency on coal (lignite) in the case of Germany and expensive liquefied natural gas imported from the rest of the world.

At the end of 2022, Germany’s energy mix was the clearest example of its energy policy failure. Hard coal and lignite accounted for 31.2%, natural gas 13.8%, and mineral oil 0.8%, with nuclear at 6.0%. After almost 200 billion euros in renewable subsidies, Germany needs more coal and imported natural gas.

What did the government decide after facing the mistake of shutting down almost all its nuclear fleet? Double down and continue with the process of closing the remaining ones. No wonder Germany is in recession. Its industrial model requires abundant and affordable energy, and the different governments have made the cost of energy uncompetitive.

Same is the problem with Spain, the government decided to implement an “Iberian exception” that eliminates the cost of gas from the wholesale power price only to charge it back to consumers as a surcharge in the bill. The result is Spain has the fifth highest electricity bill in Europe, which sent hundreds of millions of euros to France and Portugal that purchased the subsidized energy while the Spanish consumer paid the bill to natural gas producers, and its imports of Russian liquefied natural gas (LNG) soared, but the government tried to convince citizens that LNG from Novatek is not Russian gas because it is not a pipeline Gazprom supply, even when the supplier is a leading Russian energy multinational.

Even worse, the consumers have not seen the improvement in commodities in their bills. If we look at the latest reported Eurostat figures of household electricity prices, these increased in all but two EU Member States in the second half of 2022, compared with the second half of 2021, just as commodities slumped in international markets.

The average for the EU stands at 252 euros per MWh and 261 euros per MWh for the euro area. This is 20% to 30% higher than the average residential electricity rate in the United States, according to data from Energy Sage.

The European energy crisis was not solved. It was disguised thanks to a mild winter and the slowdown in coal and gas imports from China. European governments continue to place all their bets on a misguided energy transition that ignores security of supply and competitiveness and will make the EU depend on China for rare earths and metals as well as the US and OPEC for commodities.

The European Union should have abandoned ideological decisions and allowed technology, competition, and industry to provide the optimal solution that delivers a competitive and secure supply of energy.

Deciding to forbid the development of domestic resources and focus on intermittent and volatile sources of energy before the battery technology is fully operational is an enormous mistake that condemns the European Union to suffer higher costs and lower growth. Environmental policies must be considered from a global perspective.

The EU accounts for less than 10% of global emissions but almost 100% of the cost. It needs to focus on competitiveness, security of supply, and respect for the environment from an industrial perspective. Ignoring the importance of making the most of nuclear, hydroelectric, gas, and all other available sources is dangerous.

In China or the United States, affordability, security of supply, and competitiveness are the drivers of energy policy.

In Europe, it is a misguided view of “not in my backyard” that is making the continent more dependent on others, not less. Subsidies are delaying the necessary development of intermittent and volatile energy sources because policymakers reject the importance of creative destruction and competition as driving forces of progress. Interventionism is not delivering better or cheaper energy; it is making the European Union lose in the technology and energy security race.

Indonesia seizes Iranian flagged tanker

Indonesian coast guard said on Tuesday it seized an Iranian-flagged supertanker suspected of involvement in the illegal transshipment of crude oil, and vowed to toughen maritime patrols.

The MT Arman 114 was carrying 272,569 tons of light crude oil, valued at US$304 million, when it was seized last week, the Indonesian authorities said.

The Very Large Crude Carrier (VLCC) was suspected of transferring oil to another vessel without a permit on Friday, the Southeast Asian nation's maritime security agency said.

The vessel was captured after being spotted in Indonesia's North Natuna Sea, carrying out a ship-to-ship oil transfer with the Cameroon-flagged MT S Tinos, the agency's chief, Aan Kurnia, said.

"MT Arman was spoofing their automatic identification system (AIS) to show its position was in the Red Sea but in reality it was here," Aan told reporters.

"So it seems like they already had a malicious intent," Aan said, adding that the vessel also dumped oil into the ocean, in violation of Indonesia's environmental law.

The vessels' operators could not be immediately reached for comment.

Along with the Arman, authorities detained its Egyptian captain, 28 crew and 3 passengers, who were the family of a security officer on board, the agency said.

After the two supertankers attempted to escape, authorities focused their pursuit on Arman, assisted by Malaysian authorities as the vessel sailed into their waters, Aan said.

The Tinos was supposed to have been scrapped in 2018, he added. It was built in 1999 while the Arman was built in 1997, according to shipping database Equasis.

The "shadow" fleet of tankers carrying oil from sanctioned Iran, Russia and Venezuela has been transferring cargoes in the Singapore Strait to avoid detection, a Reuters analysis showed this year.

The risk of oil spills and accidents is growing as hundreds of extra ships, some without insurance cover, have joined the opaque parallel trade over the past few years.

Aan vowed that Indonesia's coast guard, assisted by other authorities, would strengthen patrols in its waters. Indonesia is the world's largest archipelago, with about 17,000 islands.

"We have to be firm, tough," he said. "There has to be a deterrent effect so it will not happen again."

In 2021, Indonesia seized Iranian- and Panamanian-flagged vessels over similar accusations. The captains of the two vessels received two-year probation from an Indonesian court.

 

Venezuela oil export surpasses 700,000 barrels

Venezuela's oil exports in June rose 8% from the previous month to above 700,000 barrels per day (bpd), fueled by the restart of a key crude processing unit and faster approvals for cargoes departing its shores, according to shipping data and documents from state oil company PDVSA.

Exports by PDVSA and its joint ventures declined earlier this year as an extensive audit of oil sales temporarily froze most supply contracts and led to delays authorizing vessel departures.

Second quarter shipments flowed with less hiccups with US oil major Chevron consistently increasing Venezuelan crude exports to the US under a license extended by Washington, and with PDVSA renewing other contracts and signing new supply deals.

A total of 37 cargoes departed Venezuelan ports in June carrying 715,933 bpd of crude and refined products, and 294,000 metric tons of oil byproducts, according to the data and documents.

The main destination of Venezuelan exports, directly and through trans-shipments hubs like Malaysia, was China. Chevron's exports fell slightly to some 134,000 bpd from 150,000 bpd in May, while deliveries to ally Cuba rose to some 75,000 bpd last month, compared with 58,000 bpd in May.

Iranian companies received about 131,000 bpd of crude and fuel oil last month as part of a swap agreement that also allowed PDVSA to discharge 2.1 million barrels of Iranian condensate in recent weeks. Separately, Chevron supplied its joint ventures with a 450,000 barrel cargo of US heavy naphtha, the shipping data showed.

Venezuela's oil exports averaged 670,000 bpd in the first half of the year, almost 15% above the 585,000 bpd of the same period of 2022.

A 150,000-bpd crude upgrader operated by PDVSA and Russian state firm Roszarubezhneft restarted operations in mid-June following a December fire that caused extensive damages, one of the documents showed. The unit turns extra heavy oil into exportable grades.

The Petromonagas upgrader, which was producing some 73,000 bpd of diluted crude at the end of June, is the fourth oil processing facility now in service in the Orinoco Belt, Venezuela's main oil-producing region. It joined Petrolera Sinovensa, Petropiar and Petrocedeno in processing extra heavy crude. One upgrader remains offline.

PDVSA's inventories of upgraded and diluted crudes from the Orinoco jumped to some 6.1 million barrels at the end of June from 5.8 million barrels in May. But they stood below April's 7.5 million barrels, the documents showed.

 

 

Iranian oil output increases by 350,000 bpd

According to a report by the International Energy Agency (IEA) Iran’s crude oil output has increased by about 350,000 barrels per day (bpd) since the beginning of 2023, despite the US sanctions targeting the country’s oil sector.

“Despite tough financial restrictions, Iran managed to increase crude oil output by about 130,000 bpd in 2022 to an average 2.55 million bpd, and by 350,000 bpd since the beginning of this year,” the IEA said in its latest report dubbed Oil 2023.

The report argued that Iran remains a wildcard for world oil markets, and if it is released from sanctions, production could ramp up gradually by roughly 900,000 bpd to reach the capacity of 3.8 million bpd.

Higher exports and domestic throughput have pushed Iranian crude production up to around 2.9 million bpd in May 2023, it added.

Earlier, Bloomberg reported that Iran has been shipping the highest amount of crude in almost five years despite US sanctions.

Bloomberg cited energy analysts as saying that Iran’s oil exports have surged to the highest level since the US unilaterally re-imposed sanctions on the country in 2018.

The crude shipments have doubled since last autumn to reach 1.6 million barrels a day in May 2023, according to the report.

A Reuters report said on July 16, 2022 that Iranian crude shipments continued to rise in 2023 with higher shipments to China, Syria, and Venezuela. The report quoted consultants, shipping data, and a source familiar with the matter.

A large chunk of Iran’s crude oil goes to China which is the world’s major importer of energy. Several European customers including Germany, Spain, and Bulgaria also imported oil from Iran.

The United States, under former president Donald Trump, abandoned the nuclear deal with the Islamic Republic, formally known as the Joint Comprehensive Plan of Action (JCPOA), in May 2018 and reinstated unilateral sanctions that the agreement had lifted.

Tehran's oil exports have been limited since May 2018. However, the exports have risen steadily during the term of current US President, Joe Biden.

The crude exports exceeded 1.5 million bpd in May 2023, the highest monthly rate since 2018, Reuters reported quoting Kpler, a major international tanker-tracking service.

The exports were roughly 2.5 million bpd in 2018, before the US withdrawal from the 2015 nuclear agreement.

Iran said in May it has boosted its crude output to above three million bpd. That's about three percent of global supply and would be the highest since 2018, according to figures from the Organization of the Petroleum Exporting Countries (OPEC).

SVB International, a consultant, estimates crude production hit 3.04 million bpd in May, up from 2.66 million bpd in January. Exports of crude and condensate were 1.93 million bpd in May, according to the report.

"Sanctions are in place but perhaps they are not fully implemented or monitored," said Sara Vakhshouri of SVB.

The recently published figures are the latest sign that US sanctions on Iran have failed to cut the country’s oil revenues to zero, an objective frequently stated by former and current US administration officials.

They also vindicate efforts by Iran in recent years to rely more on diplomatic and economic resources to circumvent US sanctions rather than to submit to Washington’s pressure to scale back its nuclear, defense, and foreign policy programs in return for an easing of the sanctions.

In May, senior US Republican Senator Lindsey Graham confessed to the ineffectiveness of the sanctions that have been unilaterally imposed on Iran.

Graham slammed the Biden administration for failing to stop Iran’s oil exports.

“Iranians are making more money under sanctions not less and China is the biggest reason we're not doing a damn thing about it,” he reportedly said.

Iran and Cuba sign agreements

In the final step of his three-nation tour of Latin America, President Ebrahim Raisi of Iran visited Cuba on Thursday morning, Iran’s local time.

Upon his arrival in Havana, Raisi was warmly welcomed by his Cuban counterpart Miguel Diaz-Canel. They held private talks after the welcoming ceremony.

Iranian President is accompanied by a top economic and political delegation, including ministers of foreign affairs, oil, defense, and health.

Six cooperation documents and memorandums of understanding were signed between the senior officials of Iran and Cuba in the presence or Raisi and Diaz-Canel.

The cooperation agreements are in areas of comprehensive political cooperation, customs, digital communication, etc.

Raisi visited Havana after concluding his tour of Venezuela and Nicaragua. He started his tour of three Latin American states on Monday morning.

Amir Abdollahian said on Thursday that Iran and Cuba are among the pioneers of convergence in their own region.

“Iran and Cuba are among the pioneers in the development of regional convergence that can provide the opportunity for each other’s presence in coalitions formed on both sides of the globe,” he wrote on his Twitter account, according to Press TV.

Amir Abdollahian also said the two countries can cooperate in many fields, including biotechnology, medicine and nuclear energy.

Before starting his tour of Latin America, Raisi said Iran, Venezuela, Nicaragua and Cuba oppose hegemony and unilateralism in the world.

Raisi also met with Iranian businesspersons in Venezuela and Cuba.

In February, Amir Abdollahian had visited Nicaragua and Venezuela.

During Venezuelan President Nicolas Maduro’s trip to Tehran in June 2022, the two countries signed a 20-year partnership agreement intended to bolster cooperation in various fields.

The partnership agreement includes cooperation in science, technology, agriculture, oil and gas, petrochemicals, tourism and culture.

 

 

Iranian president meets Venezuela president

Iranian President Ebrahim Raisi and his accompanying delegation held several meetings with Venezuelan officials in a bid to deepen partnership between Tehran and Caracas. 

On Monday morning Iran’s local time, President Raisi left Tehran for a tour of three Latin American nations -Venezuela, Nicaragua, and Cuba- as the head of large politico-economic delegation. 

Upon his arrival in the Venezuelan capital, the Iranian president was accorded an official reception in which the national anthems of Iran and Venezuela were played. During the playing of the national anthem of the Islamic Republic of Iran, a group of Venezuelan children and teenagers sang the national anthem of Iran in Persian.

After the reception ceremony, President Raisi and his Venezuelan counterpart Nicolas Maduro held a meeting in which they discussed ways to boost bilateral cooperation. 

In the meeting, Raisi described the relations between the two countries as strategic. 

“Despite the expansion of relations between Iran and Venezuela in recent years, diverse mutual capacities require the agreements of the two countries to be implemented as quickly as possible and the relations between them to be upgraded to higher levels,” he said, according to the official website of the Iranian presidency. 

Raisi underlined the achievements that Iran made while being under US. sanctions. He said Iran can share these achievements with Venezuela.

“The Iranian nation has gained valuable experiences and achievements in the field of science and technology by standing up to the domination system and overcoming the sanctions, which can be shared with Venezuela,” Raisi noted.

The Iranian president also touched on the emerging new world order, saying that such a development can benefit Iran and Venezuela. Stating that a new system is being formed in the world, Raisi said that the future of these developments will benefit the freedom-seeking and independent countries of the world.

President Maduro, praised the history of strategic relations between Tehran and Caracas and announced his determination and the members of the cabinet of this country to start a new round of efforts and measures to expand relations with the Islamic Republic of Iran.

Maduro also hailed the emerging new world order. “In the new world that is being formed, imperialism is falling and the countries that have resisted the arrogance of the arrogant are on the verge of victory,” he said. 

Stressing the need for establishing a direct air link between the two countries and strengthening shipping lines to increase trade between Iran and Venezuela Maduro said, “The two countries have good capacities for cooperation in the fields of tourism, agriculture and animal husbandry.”

In the meeting of the high-ranking delegations of Iran and Venezuela, the presidents of the two countries called Martyr Haj Qassem Soleimani and the late Venezuelan politician Simón Bolivar as heroes of the fight against domination and imperialism.

Maduro praised General Soleimani. “I always remember General Soleimani and I pay tribute to him. In 2018, a brutal cyber attack from United States was launched on our energy infrastructure. He directed a team to investigate the cyberattack and helped us a lot. Many do not know about that,” Maduro said, according to Fars News. 

He added, “I also pay my respects and we will install his bust in the tomb of Simon Bolivar.”

In Caracas, President Maduro also awarded Raisi the national honor of Venezuela.

Raisi and Maduro also participated in Iran-Venezuela high-level joint commission meeting. After the meeting, the presidents of the two countries held a joint press conference.  

“Iran and Venezuela have common interests and views in the fields of independence, freedom and justice, which has brought the people of these two countries closer together,” Raisi said at the presser. 

He also stated that the people of Iran and Venezuela have common enemies who do not want them to live independently. 

“The Iranian nation has proven its friendship with the Venezuelan people over the past years and has always shown that it is their friend during their difficult times,” Raisi added.

Pointing out that the relations between Iran and Venezuela are not ordinary, but strategic, President Raisi said, “Having common interests, views and enemies have made cooperation deep and strategic.”

He added, “Today, the two countries are determined to develop relations in different fields.”

Raisi stated, “The Islamic Republic of Iran, thanks to the blessings of the Islamic Revolution, the pure blood of the martyrs, and the resistance of the Iranian people, has been able to turn the pressures and sanctions into opportunities, and in this way has provided various capacities that are ready to be shared with the resilient nation of Venezuela.”

At the end, Raisi once again paid tribute to the national heroes of Venezuela and honored the memory and name of the resistance martyr Haj Qassem Soleimani and saluted his noble soul.

 

Venezuelan president arrives Saudi Arabia

Venezuelan President Nicolas Maduro arrived in Saudi Arabia on Monday, state media reported, as the kingdom continues to expand its diplomatic outreach beyond traditional Western alliances.

Maduro was received at the airport of the Saudi Red Sea city of Jeddah by Deputy Governor of Mecca region Prince Badr bin Sultan and other officials, Saudi state news agency SPA reported.

Venezuela's Maduro is the latest US foe to visit Saudi Arabia as the kingdom rebuilds alliances without the blessing of the United States, its long-time ally.

Riyadh has restored ties with Iran and Syria over the last months and strengthened its cooperation with China and Russia.

SPA did not give a reason for Maduro's visit but the fellow OPEC nation had sought coordination in the past with Saudi Arabia on falling oil prices and US sanctions.

Maduro's visit comes a day before US Secretary of State Antony Blinken lands in Saudi Arabia for talks with the Saudi leadership.

Since taking office, US President Joe Biden has eased some sanctions on Venezuela - many imposed by his predecessor Donald Trump in a maximum pressure campaign - to encourage dialogue. But negotiations have stalled again.

The United States says it will ease sanctions on the OPEC nation only in return for concrete steps toward free elections there

Venezuela March oil exports rise

Venezuela's oil exports rose in March to the highest monthly average since August last year, boosted by a resumption of loadings after an export freeze and by rising cargoes assigned to Chevron Corp.

State oil company PDVSA has reinstated two export contracts after a January freeze by new boss Pedro Tellechea, a medium-term contract with Hangzhou Energy, and another with Portugal-based Adinius Sociedade de Servicios.

Those two customers accounted for the largest portion of exports, a sign that PDVSA is consolidating contracts it had with dozens of little-known firms responsible for the loss of billions of dollars from failed payments into fewer agreements.

Oil swap deals with Chevron, Cuba's state company Cubametales and Iran's Naftiran Intertrade Co (NICO) - and most exports of oil byproducts - have continued flowing without interruption during the freeze.

PDVSA and its joint ventures in March shipped a total of 774,420 barrels per day (bpd) of crude and fuel, mainly to China, a rebound from the low figures registered in the two previous months, the documents and data showed.

Eight very large crude carriers (VLCC) set sail from Venezuelan ports, which eased a tanker bottleneck that had built up since early 2023.

Chevron received and exported about 115,000 bpd of Venezuelan heavy crude to the US, an increase from about 80,000 bpd in February.

PDVSA and Venezuela's oil ministry did not reply to a request for comment. Hangzhou Energy and Adinius Sociedade de Servicios could not be reached for comment.

An Iranian supertanker, the Sea Star III, arrived in Venezuelan waters on the weekend carrying 2.1 million barrels of condensate to dilute PDVSA's oil, according to monitoring firm TankerTrackers.com. The vessel, owned by National Iranian Tanker Company, had its tracker offline since February when it set sail from Assaluyeh.

Venezuela also exported 276,000 tons of oil byproducts, a decrease from the 347,000 tons of the previous month and from 727,000 tons in January, as shipments of petroleum coke declined.

As part of an extended audit of its supply contracts, PDVSA is reviewing accounts of Geneva-based firm Maroil Trading, owned by Venezuelan shipping magnate Wilmer Ruperti, over outstanding debts from petroleum coke supply. Ruperti last week said the situation "was resolved."

All contract revisions are part of a widespread anti-corruption probe that has resulted in the arrest of more than 40 officials and businessmen, according to the Venezuelan attorney general's office. Powerful Oil Minister Tareck El Aissami resigned last month amid the investigation.

 

 

Venezuela: Iran to revamp largest refining complex

State firms from Iran and Venezuela will start in the coming weeks a 100-day revamp of the South American nation's largest refining complex to restore its crude distillation capacity, reports Reuters.

The effort by state oil firm Petroleos de Venezuela (PDVSA) and the state-owned National Iranian Oil Refining and Distribution Company (NIORDC) to boost fuel output at the Paraguana Refining Center marks a step toward ending Venezuela's reliance on US refinery technology.

Venezuela, which has the world's largest crude reserves, has struggled in recent years to produce enough gasoline and diesel due to refinery outages, a lack of investment and US sanctions that create obstacles for imports.

Long lines at gasoline stations have been common since 2020.

Tehran has strengthened ties with Caracas in recent years, providing crude and condensate as well as parts and feedstock for Venezuela's aging 1.3 million barrel per day oil (bpd) refining network.

A unit of NIORDC signed a 110-million-euro contract with PDVSA in May to repair Venezuela's smallest refinery, the 146,000-bpd El Palito in the center of the country, a project that is currently underway.

The companies are now expected to sign in the coming weeks a 460-million-euro contract to revamp the 955,000-bpd Paraguana refinery complex on the coast of western Venezuela.

Iran's Foreign Minister Hossein Amirabdollahian arrived in Caracas on Friday and met Venezuela's oil minister Tareck El Aissami, according to tweets from the Iranian embassy in Caracas and Venezuela's oil ministry.

The Paraguana revamp project will allow NIORDC to hire contractors and outsource work to repair five of the complex's nine distillation units, which do the primary refining of crude oil.

Paraguana - composed of the Amuay and Cardon refineries - operated at 25% of capacity this month even after the restart of Amuay's catalytic cracker, a key unit for gasoline.

Iran will be in charge of parts procurement, installation and inspection before handling the refinery's operations back to PDVSA.

The planned distillation unit overhaul will combine Chinese and Iranian parts and equipment in refineries originally built with US technology. The integration of the new and old components will not be easy, they added.

If the revamp succeeds, a larger overhaul could follow in 2024 and 2025, according to the sources.

"If the distillation plants do not work, the refinery does not work," said Caracas-based energy expert Nelson Hernandez. "The whole facilities need to pass through a revamp or a major maintenance program."

A project to restore the complex's dilapidated power supply is also planned as part of the revamp.

Crude supply to the Amuay and Cardon refineries could be modified to increase motor fuel output, as NIORDC did at El Palito, where Iranian oil was added to the refinery's feedstock.

Iran's technicians also are considering adding upgraded crude from the Petromonagas project, a PDVSA joint venture with a Russian state oil company.

"They are aiming to eliminate lines for gasoline. That is what they want, to stabilize domestic supply," another source said of Venezuela's Socialist government.

The Iran-flagged cargo vessel Golsan arrived in Venezuela this month carrying equipment, Refinitiv Eikon data showed. The ship made a first stop at La Guaira port, near Caracas, and proceeded to PDVSA's Jose port, near the Puerto la Cruz refinery in eastern Venezuela.

Iranian technicians have inspected Venezuela's refineries several times in the last year to prepare for the arrival of at least 400 Iranian workers who will work alongside between 1,000 and 1,500 local staff and contractors.

Venezuelan officials have been assigned the task of finding temporary housing and vehicles for the workers, including the possibility of building a camp close to Paraguana.

A firm date for the Iranian workers' arrival has not yet been communicated to Paraguana's staff.

During the El Palito revamp, PDVSA sent home hundreds of Venezuelan workers to make way for the Iranian technicians, which triggered protests. A separate group of contractors claiming they have not been paid for work at Paraguana since 2021 also have protested recently.

"We've been criticized, told we are bad or inexperienced professionals," said one Venezuelan worker from Paraguana who asked not to be named for fear of retaliation. "We've been forced to produce in the most difficult conditions. Yet, we have delivered."

 

Iran oil production grows 7% in 2022

Iran oil production in 2022 increased 7% as compared to the previous year, according to OPEC’s first monthly report released in 2023.

According to the Report, Iran produced 2.554 million barrels per day (bpd) of crude oil in 2022 that was 162,000 bpd more than the figure for 2021, when the output was reported at 2.392 million bpd.

Citing secondary sources, the report put Iranian crude output for December 2022 at 2.574 million bpd indicating a 9,000-bpd increase as compared to the figure for November 2022.

The country’s heavy crude oil price also increased by US$30.12 in 2022 to register a 43% rise as compared to the previous year, according to the OPEC report.

Iran sold its heavy crude oil at US$99.92 per barrel on average in the mentioned year, as compared to 2021 when the average price was US$69.8 per barrel.

In December 2022, the average price of Iranian heavy oil was reported at US$79.11, which decreased by US$9.62 compared to the earlier month.

Iran has been ramping up its oil production and exports over the past year as the country has been implementing new strategies to overcome US sanctions.

A recent report by Reuters stated that Iran’s oil exports have reached new highs in the last two months of 2022 and are making a strong start to 2023 despite US sanctions.

According to ship tracking data, Iran oil exports have risen mostly due to the higher shipments to China and Venezuela.

Energy consultant SVB International said Iran's crude exports in December 2022 averaged 1.137 million barrels per day, up 42,000 bpd from November 2022 and the highest 2022 figure SVB has reported based on estimates given earlier.

"In comparison to the Trump administration, there hasn't been any serious crackdown or action against Iran's oil exports," said Sara Vakhshouri of SVB. "January exports were so far strong like previous months."

Lower Chinese demand and Russia's supply to China have been a major challenge for Iran. Most of its oil still goes to the Far East, ultimately China. Iran also helps Venezuela to export its oil.

Consultant Petro-Logistics, which tracks oil supply, said it was also seeing an upward trend in Iranian crude exports which, in its view, in December 2022 reached their highest level since March 2019.

Kpler, a data intelligence firm, put Iranian crude exports at 1.23 million bpd in November 2022, the highest since August 2022 and almost at par with April 2019 average of 1.27 million bpd, although these slipped to just below 1 million bpd in December 2022.

According to another analyst, Vortexa, China's December 2022 imports of Iranian oil hit a new record of 1.2 million bpd, up 130% from a year earlier.

"Most of these shipments found home in Shandong, where independent refiners have turned to discounted grades since the second half of 2022 amid sluggish domestic demand and depressed refining margins," the company said.

Vortexa said supply of Russian Urals, the main competing grade to Iranian oil, fell in December 2022 - when a price cap on Russian crude exports and European Union ban created uncertainty for buyers.

The press department of China's Foreign Ministry, in response to a Reuters request for comment, said, "The legitimate and reasonable cooperation between China and Iran under the international legal framework deserves respect and protection," without directly addressing Reuters query on China's record Iranian oil purchases.

Iran has also been expanding its role in Venezuela, despite US sanctions, sending supplies of light oil for refining and diluents to produce exportable crude grades.

Iran's national budget bill for the upcoming year is based on even higher shipments of 1.4 million bpd, the semi-official Fars news agency reported this week.

Following Trump's removal of the United States from the nuclear deal and reimposition of sanctions, Iran's crude exports fell back to as little as 100,000 bpd at times in 2020 from over 2.5 million bpd in 2018, according to tanker trackers.

 

Oil prices to hover around US$90 over next five years

Conflict in Ukraine, sanctions on Russia, intensifying rivalry between the United States and China, lingering pandemic disruptions, and the slowdown in the business cycle all seem to be combining to make forecasts more uncertain.

Brent oil prices are expected to hover around US$90/barrel over the next five years, according to eighth annual survey of energy market professionals by John Kemp a senior market analyst at Reuters specializing in oil and energy systems.

Forecasts range from US$4 to US$10 per barrel above predictions at the time of the 2022 survey, conducted before Russia's invasion of Ukraine, and up by around US$20 compared with the 2020 survey, before the coronavirus pandemic.

In this year's survey, prices are forecast to average US$87 in 2023, down from US$99 realized in 2022, when prices surged following Russia's invasion and sanctions imposed in response by the United States and European Union.

Forecasts for 2023 are tightly clustered, with half of respondents expecting the average price to hover between US$80 and US$95, and more than 90% expecting the average to range between US$70 and US$105.

Prices are expected to continue averaging around US$90 from 2024 to 2027, with a slight downward skew in forecasts later in the period.

Forecast prices are from US$15 to US$20 per barrel above where the futures strip was trading at the time of the survey, a similar premium to the one revealed in last year's survey, but up from a premium of around US$10 before the pandemic.

Understandably, there is more dispersion in forecasts for later years, reflecting greater uncertainty about the evolution of the business cycle and structural changes affecting the industry.

But uncertainty over all time horizons has jumped significantly following the pandemic and continued to increase in the most recent survey.

Both short-term forecasts for 2023-2024 and longer-term forecasts for 2025-2027 are characterized by much higher standard deviations than comparable forecasting horizons before the pandemic.

Iran dispatches export cargo ship to Venezuela

A ship carrying Iran-made export goods has been dispatched by the Islamic Republic of Iran Shipping Line Group (IRISL) to Venezuela, IRIB reported.

According to IRISL, this is the fourth vessel carrying consignments produced by Iranian producers to the Latin American country in the current year.

As reported, another ship is also scheduled to be sent to Venezuela next month if anticipated capacities are being completed.

The IRISL has notified Iranian authorities and the chambers of commerce of the country, expressing readiness to create regular shipping line to export Iranian commodities to Venezuela.

Iran hosted the ninth meeting of the Iran-Venezuela Joint Economic Committee on November 15, 2022 during which the two sides reached agreements for the expansion of cooperation in several areas.

A senior delegation of Venezuelan officials including the country’s Transportation Minister Ramon Blazquez and Agriculture Minister Wilmar Castro Soteldo visited Iran to attend the mentioned meeting to explore new avenues for mutual cooperation.

The major economic event was co-chaired by Venezuelan Transport Minister Ramon Blazquez and Minister of Defense and Armed Forces Logistics of Iran Mohammadreza Gharaei Ashtiani.

At the end of the meeting, the two sides inked a comprehensive cooperation document covering a variety of areas including industry, mining, energy, petrochemical, trade, agriculture, science, and technology.

Addressing the event, Ashtiani said, “We firmly believe that the successful holding of this committee meeting will be the beginning and a turning point in the macro and strategic relations between the Islamic Republic of Iran and the Bolivarian Republic of Venezuela under the leadership of Seyed Ebrahim Raisi and Nicolas Maduro, the presidents of the two countries.”

He stressed that Iran and Venezuela are two independent countries with close and common positions on regional and international issues.

Prior to the two countries’ Joint Economic Committee meeting, Soteldo met with Iranian Agriculture Minister Javad Sadati-Nejad and the two sides inked a cooperation document on plant conservation and quarantine.

As reported, the signed document is a prelude to future agreements in various agriculture fields including mechanization, contract farming, knowledge and technology transfer, etc.

Speaking at the signing ceremony, Sadati-Nejad mentioned the visit of several Venezuelan delegations over the past few months, saying that these exchanges indicate the determination of the two countries to expand mutual ties.

Emphasizing the capabilities of the Islamic Republic of Iran regarding the export of agricultural products, the minister expressed hope that the export of all kinds of agricultural products and food such as dried fruits, citrus fruits, apples and etc. to Venezuela will be realized as soon as possible.

He also called on the Venezuelan side to consider special tariff reductions for Iranian agricultural products in future exchanges.

Also, on the sidelines of the two countries’ Joint Economic Committee meeting, Blazquez met with Head of Iran’s National Development Fund (NDF) Mehdi Ghazanfari during which the Iranian side expressed readiness for investment in Venezuela’s oil and petrochemical projects.

Blazquez also held a meeting with the former Head of the Islamic Republic of Iran Customs Administration (IRICA) Alireza Moghadasi during which the two sides signed an agreement on customs cooperation.

According to Moghadasi, mutual assistance and cooperation in technical fields, exchange of information between the customs of the two countries, especially focusing on the mutual identification of authorized economic operators (AEO) and risk management, are among the important provisions of this agreement.

Chevron allowed bringing Venezuelan crude to United States

The US oil refiners that once were regular buyers of Venezuelan crude are jockeying to win access to coming cargoes chartered by Chevron Corp under a newly issued US license, reports Reuters.

The Biden administration last week authorized Chevron to expand operations in Venezuela and resume taking prized heavy crude to the United States. It was first easing in more than three years of a US ban on imports from the South American nation.

A further relaxation may follow if Caracas and opposition leaders agree on terms of a presidential election, Washington has said.

Valero Energy Corp, PBF Energy and Citgo Petroleum have shown interest in getting access to the oil Chevron is expecting in coming weeks.

Venezuelan heavy crude grades, popular among US refiners for producing products from asphalt to motor fuels, had been partially replaced by Russian supplies in the aftermath of sanctions on Venezuela.

Some of these companies began contacting Chevron, shipping agencies and vessel owners to check timetables, the sources added. No Venezuelan oil officially has been allocated to Chevron yet and no chartering contracts have been signed to transport cargoes to the United States, according to Venezuelan export schedules and Refinitiv freight data.

The most recent chartering contracts to transport Venezuelan oil to the US Gulf Coast are from late 2018, right before sanctions, the Refinitiv data showed.

Valero, PBF and other US independent refiners would not need any new authorization to buy Venezuelan oil from Chevron. But Citgo, owned by Venezuela's PDVSA, may require clearance from the US Treasury Department since it operates under a license, analysts and experts said.

Chevron could prioritize its own refineries, especially Pascagoula, Mississippi, and El Segundo, California, which were regular receivers of Venezuela oil in the past.

On Thursday, Chevron CEO Michael Wirth said the company is not likely to add investment to boost Venezuela's output in the next six months as the sanctions framework will take time to be eased. The primary effect will be to allow some Venezuelan oil to flow back to the United States, "which will help the US refining system," Wirth said.

A total lifting of sanctions is unlikely in the near term, said analysts, but Venezuela's former customers, its business partners and creditors are taking steps to collect pending debts in the wake of the Chevron authorization. Washington has not signaled it would authorize other companies to collect on those debts.

Because spring and summer in the United States are the most active seasons for asphalt paving and peak driving, Venezuela's heavy Boscan crude produced by Chevron and PDVSA at their Petroboscan project could be the first exported.

To restart those shipments, dredging Maracaibo Lake's navigation channel might be needed to allow Panamax and Aframax tankers reach Venezuela's western oil terminals, shipping sources said.

A glut of Boscan crude in storage earlier this year forced a total shutdown of its processing. Draining those stocks must come first to restart output, PDVSA documents showed.

There are separate stocks of Hamaca oil and diluted crude for immediate export at the nation's largest terminal. But as of November 29, there were only 1.47 million barrels available, enough for only two cargoes, according to the PDVSA documents.

Petropiar's crude upgrader, operated by PDVSA and Chevron, was halted last week over a naphtha leak. It restarted days later to produce about 100,000 barrels per day of Hamaca.

In November, PDVSA sent 1.2 million barrels of Hamaca to its refineries for processing. About 1 million barrels of fuel oil were also shipped from Petropiar to Iran's state firm Naftiran Intertrade Co LTD (NICO) as part of an oil swap, the documents showed.

 

Increasing risk of tanker accidents

Brokers Poten highlighted the risk in its weekly report with the dark or shadow fleet expected to grow substantially when the EU import and G7 price cap for Russian oil are implemented. The illicit trades generally involve older vessels that would otherwise be recycled, with the bare minimum of repairs or maintenance, reported Seatrade Maritime News.

The trades though for less reputable owners willing to take the risk are extremely lucrative and Poten noted that estimates from knowledgeable observers suggest that shipping rates for Venezuelan or Iranian barrels can be two or three times the market rate for legitimate voyages.

“The illegal nature of the business makes it impossible to use reputable crew managers and arranging proper insurance is difficult as well. To conceal the illicit nature of their employment, owners of these tankers frequently change the vessel’s name and ownership and flag them in jurisdictions that are known to be less strict,” Poten said.

“As a result of these factors, the risk that these vessels are involved in accidents is elevated and so is the potential harm that could be inflicted on the crews and the environment, in case of an oil spill.”

This risk has been highlighted in two recent incidents. The 21-year old, Djibouti-flagged, VLCC Young Yong which ran aground in Indonesia waters in the Singapore Strait was reported to be carrying a crude oil cargo from Malaysia to China.

“The VLCC in question was recently blacklisted by the US Treasury’s Office of Foreign Asset Control (OFAC) because it was part of the so-called ‘Dark Fleet’, involved in the illicit transportation of Iranian oil,” Poten said. 

Meanwhile a 20-year old Aframax loaded with Russian crude was briefly adrift off the Spanish coast.

The dark fleet has grown dramatically over the last two years from 70 vessels in November 2020 to 257 currently. The latest sanctions on Russian oil could result in further substantial growth and Poten noted the brisk sales of secondhand tanker tonnage despite rising prices for older tonnage. It said least 60 VLCCs, 42 Suezmaxes and 93 Aframaxes, of over 15-years of age had changed hands year-to-date.

“So far, Russian exports have only been impacted by limited sanctions. However, the average age of the Aframaxes tankers, which carry the vast majority of Russia’s exports has already increased markedly. If Russia will start utilizing more vessels from the Dark Fleet, the average age of their export tankers will rise dramatically and unfortunately, so will the risk of incidents,” Poten concluded.

 

 

Can the US impose sanctions on Saudi Arabia?

The United States is all critical of the latest decision of the OPEC Plus to cut oil production. Interestingly the hike in oil and gas prices is due to the US imposing sanctions on Russia, earlier on Venezuela and Iran. It is feared that out of desperation the US may impose some sanctions on Saudi Arabia, often termed de-fecto leader of oil cartel. I invite all my readers to carefully read a Reuters news dated May 05, 2022.

According to the details, a US Senate committee passed a bill that could expose the Organization of the Petroleum Exporting Countries (OPEC) and partners to lawsuits for collusion on boosting crude oil prices.

The No Oil Producing or Exporting Cartels (NOPEC) bill sponsored by senators, including Republican Chuck Grassley and Democrat Amy Klobuchar, passed 17-4 in the Senate Judiciary Committee.

White House spokesperson Jen Psaki said the administration has concerns about the potential implications and unintended consequences of the legislation, particularly amid the Ukraine crisis. She said the White House is still studying the bill.

Versions of the legislation have failed in Congress for more than two decades. But lawmakers are increasingly worried about rising inflation driven in part by prices for US gasoline, which briefly hit a record above US$4.30 a gallon.

"I believe that free and competitive markets are better for consumers than markets controlled by a cartel of state-owned oil companies ... competition is the very basis of our economic system" Klobuchar said.

NOPEC would change US antitrust law to revoke the sovereign immunity that has long protected OPEC and its national oil companies from lawsuits.

The bill must pass the full Senate and House and be signed by President Joe Biden to become law.

If passed, the US Attorney General would gain the ability to sue OPEC or its members, such as Saudi Arabia, in federal court. Other producers like Russia, which works with OPEC in wider group known as OPEC Plus to withhold output, could also be sued.

Saudi Arabia and other OPEC producers have rebuffed requests by the United States and other consuming countries to boost oil production beyond gradual amounts, even as oil consumption recovers from the COVID-19 pandemic and Russian supply falls after its invasion of Ukraine.

OPEC Plus, which cut production when oil prices crashed to historic lows when the pandemic slashed oil demand, had agreed to stick to its existing plans to reverse the curbs with modest increases for another month.

NOPEC is intended to protect US consumers and businesses from engineered spikes in the cost of gasoline, but some analysts warn that implementing it could also have some dangerous unintended consequences.

In 2019, Saudi Arabia threatened to sell oil in currencies other than the dollar if Washington passed NOPEC, a move that could undermine the dollar's status as the world's main reserve currency, reduce Washington's clout in global trade and weaken its ability to enforce sanctions on nation states.

Senator John Cornyn, a Republican from the top US oil producing state Texas, opposed the bill, saying it could prompt OPEC to restrict shipments to the United States.

"If we really want to deal with price at the pump we ought to produce more oil and gas here in America," Cornyn said.

The bill is also opposed by the American Petroleum Institute, the top US oil and gas lobbying group. In a letter to the committee's leaders, API said, NOPEC creates significant potential detrimental exposure to US diplomatic, military and business interests while likely having limited impact on the market concerns driving the legislation.

Some analysts have cautioned that NOPEC could ultimately harm domestic energy companies if it pressures Saudi Arabia and other OPEC members to flood global markets with oil, because they produce oil much more cheaply than US companies do.

 

China: Saudi Arabia emerges the biggest oil supplier

Chinese crude oil imports from Russia in August surged 28% from a year earlier, but handed back its top supplier ranking to Saudi Arabia for the first time in four months.

Imports of Russian oil, including supplies pumped via the East Siberia Pacific Ocean pipeline and seaborne shipments from Russia's European and Far Eastern ports, totaled 8.342 million tons, data from the Chinese General Administration of Customs showed.

The August amount, equivalent to 1.96 million barrels per day (bpd), was slightly off May's record of nearly 2 million bpd.

China is Russia's largest oil buyer.

Russian imports rose as Chinese independent refiners extended purchases of discounted Russian supplies that elbowed out rival cargoes from West Africa and Brazil.

Emma Li, China analyst with Vortexa Analytics, said actual Russian supplies are likely at par with Saudi shipments at close to 8.5 million tons. Several cargoes of Russian Urals crude were reported as originating in Malaysia, according to ship-tracking data she has compiled.

Tuesday's customs data showed imports from Malaysia, often used as a transfer point in the past two years for oil originating from Iran, Venezuela and more recently Russia, nearly doubled from a year earlier, to 3.37 million tons, or 794,000 bpd, at record high.

China's purchases from Russia have climbed to reap the benefits of a plunge in European buying as the Ukraine crisis pushes Moscow in search of alternative markets. 

Still, imports from Saudi Arabia rebounded last month to 8.475 million tons, or 1.99 million bpd, 5% above a year ago levels.

Saudi Arabia also remains the biggest supplier on a year-to-date basis, shipping 58.31 million tons of oil from January to August, down 0.3%YoY, as compared to 55.79 million tons from Russia, which was up 7.3% from a year ago.

China's crude oil imports in August fell 9.4% from a year earlier, as outages at state-run refineries and lower operations at independent plants caused by weak margins capped buying.

The strong Russian purchases continued to weigh on competing supplies from Angola and Brazil, which fell in August by 34% and 47%YoY, respectively.

Customs reported no imports from Venezuela or Iran last month. State oil firms have shunned purchases since late 2019 avoiding likely secondary US sanctions.

However, Reuters reported that defense-focused China Aerospace Science and Industry Corp (CASIC) has moved 25 million barrels of Venezuelan crude into China since late 2020, which Chinese customs does not report.

China also did not import any crude from the United States.

China sends troops and tanks to Russia to participate in military games

Reportedly, Chinese People’s Liberation Army has sent a delegation to Russia to take part in Moscow’s International Army Games next month, the first time the event has been held since Russia invaded Ukraine.

A train carrying personnel, military tanks and vehicles recently left Manzhouli, Inner Mongolia in China’s north, headed to Zabaikalsk in Russia’s Far East, the military channel of state broadcaster CCTV reported on Monday, without giving further details.

The Chinese team is expected to compete against counterparts from 37 countries and regions at the event – Russia’s largest multinational military exercise. It will take place between August 13 and 27 across 12 countries, including Russia, Iran, India, Kazakhstan, Uzbekistan, Azerbaijan and Armenia.

First held in 2015, this year’s International Army Games is being held amid heightened tensions between Russia and the West after Moscow attacked Ukraine on February 24.

Venezuela – which broke off relations with the United States in 2019 after President Nicolas Maduro assumed a second term in an election that Washington considered a “sham” – is to host a sniper competition as part of the war games.

It will be the first time the Russian-led exercise has been held in the western hemisphere. That could be a “strategic move” for China, Russia, Iran and Venezuela “to preposition forward-deployed military assets in Latin America and the Caribbean”, the Centre for a Secure Free Society, a Washington-based think tank, said in a recent report.

Meanwhile, Niger and Rwanda will be the first African countries to make their debut at the games, according to the Russian defence ministry.

China has been a regular participant since 2015 and will host three competitions, including an infantry fighting vehicles game and a frigate race.

Chinese and Russian forces have stepped up joint military exercises since 2005, both bilaterally and through multilateral platforms, and these have become more regular in recent years as both countries face increasing acrimony from the West.

China’s PLA is also looking to learn from its Russian counterparts, which have carried out military operations in a number of regions in recent years, from the North Caucasus and Georgia to Ukraine and Syria.

While Beijing and Moscow have said their military cooperation does not target any third country, it has prompted growing suspicion from the West.

In its latest defence white paper released on Friday, the Japanese defence ministry said the deepening of military cooperation between China and Russia, including joint air and navy drills in Northeast Asia, “will have a direct effect on the security situation surrounding” Japan.

The International Army Games, organized by Russia’s defence ministry, brings together the militaries of dozens of countries every year in an event it says is to sharpen their skills in combat operations, including a 50km (31-mile) march through the snow.

It comes as 14 NATO allies last month took part in a 13-day joint exercise in the Baltic. Among those taking part were the United States, Norway, the United Kingdom, Germany, France and Belgium. Finland and Sweden – which applied for Nato membership after Russia’s invasion of Ukraine – also joined the exercise.

It involved more than 45 ships, 75 aircraft and 7,500 personnel and covered amphibious operations; anti-submarine and air defence drills that NATO said would demonstrate the flexibility of the maritime forces.

  

US oil and gas industry demands increasing local production over easing sanctions on Iran and Venezuela

Many decades ago I had read that United States wishes to keep global sources of energy under its control, directly or indirectly. This became crystal clear after impositions of economic sanction on Iran and Venezuela and invasion on Iraq and Libya. The latest attempt is imposition of sanctions on global energy giant, Russia.

Till yesteryear global supply of energy was controlled by ‘Seven Sisters’. Since other players, particularly OPEC Plus still enjoy substantial leverage, the new name of the game is ‘Shale Oil’. To keep shale oil producers economically viable, oil price has to be kept around US$70/barrel in the global markets.

Under the strategy of cutting supplies from major producers, the first casualty was Iran, then came Iraq and Libya and now the target is Russia. To achieve the success, two pronged strategy is being followed, containing oil supply from OPEC Plus members and boosting indigenous production. To achieve the target the US administration is already in touch with exploration and production (E&P) companies which have already started soliciting ‘incentives’, the latest news is:

The oil and gas industry of United States is positioning domestic crude production as the lesser of environmental evils, as it attempts to dissuade the administration of US president Joe Biden from easing sanctions on Iran and Venezuela.

A US ban on Russian crude imports earlier this month reframed talks to restore the 2015 Iran nuclear deal and rekindled diplomatic ties between Washington and Caracas, with market participants watching keenly for any developments that might offer incremental supply.

The US oil and gas stakeholders claim a move toward Iranian or Venezuelan barrels would signal a step back from the kind of environmental, social and governance (ESG) standards consumers, politicians and investors have called for in recent years.

"If you really care about ESG, compare the United States to other jurisdictions," Hunter Hunt, Chief Executive of Dallas-based oil and gas company Hunt Consolidated, told Argus earlier this month.

"We will have a higher commitment to the environment, a higher commitment to safety, and I think you will see a stronger understanding of all social concerns here in the US than you would see in Iran or Venezuela or other countries that potentially could fill the gap left by Russian oil."

Hunt's comments echo those heard elsewhere in the industry. AFPM President Chet Thompson on March 14, 2022 called against relying on countries with "less stringent environmental and safety standards" like Iran or Venezuela for energy.

ExxonMobil Chief Executive Darren Woods earlier this month said "production will shift to somebody else with potentially higher emissions" if climate hawks push US companies into decreasing production.

Seven Sisters

The Seven Sisters (oil companies) is a classification named by the Enrico Mattei who is an Italian politician for the seven giant oil companies that managed the oil industry worldwide until the 1970s. The company names of seven sisters are: Anglo-Persian Oil Company worked between 1908-1954 after that they became BP, Gulf Oil run within these years 1901-1985 after this year purchased by Chevron, Royal Dutch Shell, Chevron, Exxon later joined with Mobil, Texaco (1901-2000) acquired by Chevron in 2001.

The traditional period starts with the Seven Sisters giant oil firms as the authoritative strength in world petroleum businesses for the decades after World War II. Royal Dutch Shell, British Petroleum, Gulf, Exxon, Mobil, Texaco, and Chevron, the cartel operated authorizations to oil in sovereign nations with plentiful petroleum sources.

This adjustment proffered the Sister’s attribute powers over oil in Venezuela and newly named OPECs countries, and end of 1950, the Sister’s cartel maintained a 98.3% exchange portion of world petroleum production. BP, Chevron, Mobil, and Shell are remaining today, and we can say that they are the big four for the oil industry of today’s world. As for why this description is accepted.

After the 1940s, these seven big companies built a cartel that provided more than 83% of world oil production and became an oligopoly for the oil industry. They are in steadfast competition with each other, but when the rise of another company comes together, they blend and threaten that company. These companies could be termed a stop at least partially with the later OPEC countries.

According to the freshest statement of the Financial Times, cartels of this century; Shell, Exxon Mobil, Chevron, BP, as well as four major oil giants, as well as Total and ENI. However, especially in recent years, non-OECD countries have included China National Petroleum Co. (CNPC), Gazprom Russia, ConocoPhillips, Petrobras Brazil, Petronas Malaysia, and Saudi Aramco.

However, the share and support of the four major oil giants among these companies, which have achieved significant progress in recent years, is not known. Some energy experts claimed that new companies’ growth occurred with the help of seven sisters.

These seven sisters, who established the international oil industry for nearly a century, developed them through incorporations, takeovers, and incorporations and brought them to the present day, have a higher income than the gross national product of many other countries, and the tonnage of the tankers they possess is higher than the naval forces of many nations.

 

 

 

 

 

 

Get ready to trade in Russian Gold and Chinese Petroyuan

According to Information Clearing House, for a long time the world has been waiting to end trade in the currency of United States. The trade war initiated by United States against Russia and China indicate that finally some key contours of the foundations on new multipolar world have started appearing.

After a recent videoconference meeting, the Eurasian Economic Union (EAEU) and China agreed to design the mechanism for an independent international monetary and financial system.

The EAEU consists of Russia, Kazakhstan, Kyrgyzstan, Belarus and Armenia, is establishing free trade deals with other Eurasian nations, and is progressively interconnecting with the Chinese Belt and Road Initiative (BRI).

For all practical purposes, the idea comes from Sergei Glazyev, Russia’s foremost independent economist, a former adviser to President Vladimir Putin and the Minister for Integration and Macroeconomics of the Eurasia Economic Commission, the regulatory body of the EAEU.

In this article, Glazyev’s key role in devising the new Russian and Eurasian economic/financial strategy has been examined. He saw the western financial squeeze on Moscow coming light-years before others.

Quite diplomatically, Glazyev attributed the fruition of the idea to the common challenges and risks associated with the global economic slowdown and restrictive measures against the EAEU states and China.

Since China is as much a Eurasian power as Russia, both the countries need to coordinate their strategies to bypass the US unipolar system.

The Eurasian system will be based on a new international currency, most probably with the yuan as reference, calculated as an index of the national currencies of the participating countries, as well as commodity prices. The first draft will be discussed by the end of March this year.

The Eurasian system is bound to become a serious alternative to the US dollar, as the EAEU may attract not only nations that have joined BRI (Kazakhstan, for instance, is a member of both) but also the leading players in the Shanghai Cooperation Organization (SCO)as well as ASEAN. West Asian actors – Iran, Iraq, Syria and Lebanon – will be inevitably interested.

In the medium to long term, the spread of the new system will translate into the weakening of the Bretton Woods system, which even serious US market players/strategists admit is rotten from the inside. The US dollar and imperial hegemony are facing stormy seas.

Meanwhile, Russia has a serious problem to tackle. This past weekend, Finance Minister Anton Siluanov confirmed that half of Russia’s gold and foreign reserves have been frozen by unilateral sanctions. It boggles the mind that Russian financial experts have placed a great deal of the nation’s wealth where it can be easily accessed – and even confiscated.

At first it was not exactly clear what Siluanov had meant. How could the Central Bank’s Elvira Nabiulina and her team let half of foreign reserves and even gold be stored in Western banks and/or vaults? Or is this some sneaky diversionist tactic by Siluanov?

No one is better equipped to answer these questions than the inestimable Michael Hudson, author of the recent revised edition of Super Imperialism: The Economic Strategy of the American Empire.

Hudson was quite frank, he said “When I first heard the word ‘frozen,’ I thought that this meant that Russia was not going to expend its precious gold reserves on supporting the ruble, trying to fight against a Soros-style raid from the west. But now the word ‘frozen’ seems to have meant that Russia had sent it abroad, outside of its control.”

“It looks like at least as of last June, all Russian gold was kept in Russia itself. At the same time it would have been natural to have kept securities and bank deposits in the United States and Britain, because that is where most intervention in world foreign exchange markets occurs,” Hudson added,

Essentially, it is all still up in the air, “My first reading assumed that Russia must be doing something smart. If it was smart to move gold abroad, perhaps it was doing what other central banks do, lend it to speculators, for an interest payment or fee. Until Russia tells the world where its gold was put, and why, we can’t fathom it. Was it in the Bank of England – even after England confiscated Venezuela’s gold? Was it in the New York Fed – even after the Fed confiscated Afghanistan’s reserves?”

So far, there has been no extra clarification either from Siluanov or Nabiulina. Scenarios swirl about a string of deportations to northern Siberia for national treason. Hudson adds important elements to the puzzle.

“If the reserves are frozen, why is Russia paying interest on its foreign debt falling due? It can direct the freezer to pay, to shift the blame for default. It can talk about Chase Manhattan’s freezing of Iran’s bank account from which Iran sought to pay interest on its dollar-denominated debt.

It can insist that any payments by NATO countries be settled in advance by physical gold. Or it can land paratroopers on the Bank of England, and recover gold – sort of like Goldfinger at Fort Knox. What is important is for Russia to explain what happened and how it was attacked, as a warning to other countries.”

As a clincher, Hudson could not but wink at Glazyev: “Maybe Russia should appoint a non-pro-westerner at the central bank.”

It’s tempting to read into Russian Foreign Minister Sergey Lavrov’s words at the diplomatic summit in Antalya last Thursday a veiled admission that Moscow may not have been totally prepared for the heavy financial artillery deployed by the Americans.

“We will solve the problem – and the solution will be to no longer depend on our western partners, be it governments or companies that are acting as tools of western political aggression against Russia instead of pursuing the interests of their businesses. We will make sure that we never again find ourselves in a similar situation and that neither some Uncle Sam nor anybody else can make decisions aimed at destroying our economy. We will find a way to eliminate this dependence. We should have done it long ago.”

One of its planks will be the Eurasian financial system. Meanwhile, the market (as in, the American speculative casino) has judged (according to its self-made oracles) that Russian gold reserves – the ones that stayed in Russia – cannot support the ruble.

That’s not the issue – on several levels. The self-made oracles, brainwashed for decades, believe that the Hegemon dictates what the market does. That’s mere propaganda. The crucial fact is that in the new, emerging paradigm, NATO nations amount to at best 15 percent of the world’s population. Russia won’t be forced to practice autarky because it does not need to most of the world – as we’ve seen represented in the hefty non-sanctioning nation list – is ready to do business with Moscow.

Iran has shown how to do it. Persian Gulf traders confirmed that Iran is selling no less than 3 million barrels of oil a day even now, with no signed JCPOA (Joint Comprehensive Plan of Action agreement, currently under negotiation in Vienna). Oil is relabeled, smuggled, and transferred from tankers in the dead of night.

Another example, Indian Oil Corporation (IOC), a huge refiner, just bought 3 million barrels of Russian Urals from trader Vitol for delivery in May. There are no sanctions on Russian oil – at least not yet.

Washington’s reductionist, Mackinderesque plan is to manipulate Ukraine as a disposable pawn to go scorched-earth on Russia, and then hit China. Essentially, divide-and-rule to smash not only one but two peer competitors in Eurasia who are advancing in lockstep as comprehensive strategic partners.

As Hudson sees as, “China is in the cross-hairs, and what happened to Russia is a dress rehearsal for what can happen to China. Best to break sooner than later under these conditions. Because the leverage is highest now.”

All the blather about crashing Russian markets, ending foreign investment, destroying the ruble, a full trade embargo, expelling Russia from the community of nations, and so forth –that’s for the zombified galleries. Iran has been dealing with the same thing for four decades, and survived.

Historical poetic justice, as Lavrov intimated, now happens to rule that Russia and Iran are about to sign a very important agreement, which may likely be an equivalent of the Iran-China strategic partnership. The three main nodes of Eurasia integration are perfecting their interaction on the go, and sooner rather than later, may be utilizing a new, independent monetary and financial system.

But there’s more poetic justice on the way, revolving around the ultimate game-changer. And it came much sooner than we all thought.

Saudi Arabia is considering accepting Chinese yuan – and not US dollars – for selling oil to China. Beijing told Riyadh this is the new groove. The end of the petrodollar is at hand – and that is the certified nail in the coffin of the indispensable Hegemon.