Russian hydrocarbon (Oil and Gas and Coal) Industry: News #4

Hole wrote:According to Pepe Escobar Russian experts are already in Mongolia for the new pipeline to China.

owais.usmani wrote:
Mr. JohninMK, I always enjoy your posts, but I always wonder why you don't use the (embed) tags for posting twitter posts? It makes much easier to view them.

Saudi Arabia contemplates accepting yuan on oil sales to China, 15.03.2022.

The move could damage the dollar's dominance in the global oil market and represent a turnaround in the stance of the world's leading oil exporter. By Dow Jones-Dubai and Riyadh.

Saudi Arabia is in active negotiations with Beijing to price some of its oil sales to China in yuan, according to people familiar with the matter.

The move could damage the dollar's dominance in the global oil market and represent a turnaround in the stance of the world's leading oil exporter.

Negotiations with China on the sale of yuan oil have been going on for six years, but have been accelerated this year as the Saudis ' dissatisfaction with the White House increases.

The Saudis are angered by the lack of support from the United States for intervention in Yemen's civil war and the attempt by Joe Biden's government to revive the nuclear deal with Iran.
In addition, Saudi officials said they were shocked by the abrupt US exit from Afghanistan in 2021.

China buys more than 25% of the oil that Saudi Arabia exports. If traded in yuan, these sales would raise the position of the Chinese currency.

For Saudi Arabia, the decision to trade some of its roughly 6.2 million barrels exported daily in something other than dollars would also represent a profound change.

The bulk of global oil sales-about 80% - is made in dollars. The Saudis have traded oil exclusively in the U.S. currency since 1974, following an agreement with the Government of Richard Nixon that included security guarantees for the country.

China introduced yuan oil contracts in 2018 as part of its efforts to make the local currency tradable around the world, but the move did not affect the dollar's dominance in the oil market.

For Beijing, the use of dollars has become a risk, something that has been exacerbated by US sanctions on Iran for its nuclear program and Russia in response to the Ukrainian invasion.

The Chinese have been approaching Saudi Arabia in recent years. Beijing helped the country build its own ballistic missiles, held consultations on a nuclear program and began investing in pet projects of Crown Prince Mohammed bin Salman.

Meanwhile, Saudi relations with the US have deteriorated since the inauguration of Biden, who said on the campaign trail that the country should become an "international pariah" for the murder of journalist Jamal Khashoggi.


In addition, economic ties between the US and Saudi Arabia are weakening. Americans are now among the largest oils in the world. In the early 1990s, the country imported 2 million barrels per day from the Saudis, but this figure fell to 500 thousand by December 2021, according to the US Energy Information Administration.

On the other hand, China's oil imports have increased over the past three decades, in line with its economic expansion. Saudi Arabia was the country's top supplier in 2021, selling 1.76 million barrels per day, according to data from China's General Administration of Customs.


"The dynamics have changed dramatically. The U.S. relationship with the Saudis has changed, China is the world's largest oil importer and they are offering a lot of incentives to the kingdom," a Saudi official said. "China has offered everything you can imagine."

An American official called the idea of the Saudis selling oil to China in yuan " highly volatile and aggressive," as well as "unlikely." This official said that Riyadh had already disclosed the proposal in the past, when there was tension between the two countries.

"The oil market, and by extension the entire global commodity market, is the insurance policy of the dollar's status as a reserve currency," said economist Gal Luft, co-director of the Institute for the Analysis of Global Security. "If this brick is removed from the wall, it will begin to crumble.

Yandex Translate from Portuguese

Source: Brazilian business news outlet Valor Econômico

JohninMK wrote:

owais.usmani wrote:
Mr. JohninMK, I always enjoy your posts, but I always wonder why you don't use the (embed) tags for posting twitter posts? It makes much easier to view them.

I'm pleased. Partly habit and partly I'm on a PC where copy/paste takes up less screen.

Vitol: Oil Is Underpriced For Current Supply Risks

The recent slump in oil prices does not reflect the actual risk of Russian supply disruption, a senior executive of Vitol has warned.

Brent crude dropped from close to $140 per barrel right after the start of the war in Ukraine to $104 per barrel last week as the United States and the International Energy Agency announced massive reserve releases. However, this would not be able to offset lost Russian barrels over the next few months, Bloomberg quoted Mike Muller, head of Vitol’s Asian operations, as saying.

“Oil feels cheaper than most would’ve predicted,” Muller said on a podcast produced by Gulf Intelligence. “Oil prices could be higher given the risk of disruption of supplies from Russia. But people are still lost figuring out those numbers.”

In the third quarter, Muller said, Russian oil and oil product exports could be down by between 1 and 3 million barrels daily, from 7.5 million barrels daily under normal circumstances.

Muller also noted that demand was going to continue to strengthen despite China’s recent dip because of the resurgence of the coronavirus.

“China will throw the kitchen sink at making sure the economy delivers,” Muller said. “We are going to see China put a massive effort into infrastructure spending and propping up the economy. You’re going to see a big outlay.”

At the same time, any additional supply from Iran will be slow in coming. This weekend, Iran’s foreign minister Hossein Amir-Abdollahian said the parties at the nuclear deal negotiating table were close to an agreement, adding, “We have passed on our proposals on the remaining issues to the American side through the EU senior negotiator, and now the ball is in US court.”

Oil started the week with a decline after the Houthi rebel group in Yemen and the Saudi-led coalition agreed to a truce that alleviated some Saudi oil supply concerns sparked last month by a string of Houthi attacks on Saudi oil targets.

IEA Member Countries agree to new emergency oil stock release in response to market turmoil

[...]

The agreement was reached at an Extraordinary Meeting of the IEA Governing Board, which was held at the Ministerial level and chaired by US Secretary of Energy Jennifer Granholm.

The details of the new emergency stock release will be made public early next week. The agreement follows the previous action taken by IEA Member Countries, announced last month, to which they pledged a total of 62.7 million barrels.

[...]

IEA Members hold emergency stockpiles of 1.5 billion barrels. Today’s agreement will be the fifth time that the IEA releases emergency stocks. Previous collective actions were taken in 1991, 2005, 2011 and on 1 March, 2022.

owais.usmani wrote:

https://twitter.com/GarlandNixon/status/1514211548755079170

Yep, agree with her.