OIL & ENERGY INSIDE Mission Impossible: Predicting The Oil Market

 It's been another very busy week for oil and gas markets as Putin threatened European gas imports, a storm knocked a major oil pipeline offline, and a Saudi oil terminal came under missile attack. Brent is back above $120 per barrel as bullish sentiment remains dominant, but plenty of bearish factors are still looming.

Oilprice Alert. Bullish factors in oil markets are piling up, from attacks on Saudi oil infrastructure to a potential end of Russian oil exports to Europe. As these geopolitical and fundamental factors combine, our analysts are working hard to keep GEA Members ahead of the news and ahead of the markets.















Friday, March 25th, 2022

The beauty of the oil market lies in how unpredictable it is. The big story of this week – storms damaging export facilities of Kazakhstan’s flagship 1.2 million b/d CPC grade – was expected to drag oil prices down on Friday when loadings restarted. Just as it seemed that Brent could move lower from the $120 per barrel mark, the specter of Saudi supply disruption reappeared with an oil storage facility taking a missile hit in Jeddah, presumably from Yemen’s Houthi militias. Coupled with the dormant Iranian nuclear deal and incessant European quarreling about the right way to sanction Russia – not even a coal embargo could be agreed upon – predicting the movement of the oil market is only getting harder.  

US Clinches New LNG Supply Deal with Europe. US producers will seek to supply 15 billion cubic meters of LNG to the European Union in 2022 as a means of weaning the continent off Russian gas dependence.

Caspian Terminal Outage Turns Up the Differential Heat. Europe’s largest light sweet crude stream, the 1.2 million b/d CPC that incorporates most of Kazakhstan’s production, saw its outflows curbed dramatically this week after a storm reportedly damaged two of the three berths at the CPC export terminal. 

OPEC Expresses Concern at European Russian Embargo Threat. According to media reports, OPEC officials have informed the European Union that a possible EU ban on Russian oil would hurt consumers and advised against it, indicating that Riyadh and Abu Dhabi want to keep the OPEC+ group alive.

Putin’s Rouble Payment Threat Triggers Gas Markets. Russia’s President Vladimir Putin demanded the conversion of Gazprom’s (MCX:GAZP) long-term gas contracts into roubles, sending shockwaves across European gas importers who could see another record spike in gas prices should the threat materialize. 

Floating Mines Will Make Black Sea Shipping High-Risk. Shipping insurance companies have urged clients operating in the northwestern part of the Black Sea to be wary of floating mines reportedly drifting south after they broke loose from their tethers in Ukrainian ports.  

ICE Increases Trade Margins as Default Risks Proliferate. The Intercontinental Exchange (ICE) increased the margins for Brent crude futures by 19%, the third margin update this year already, with wild volatility swings compelling it to hike the collateral required from market participants to cover the risk of default. 

Shell Signs Up for German LNG Terminal Deal. UK oil major Shell (LON:SHEL) has committed to booking a substantial part of the Brunsbuttel LNG import terminal that is assumed to be built in northern Germany by 2026, marking a strong first move for the 8 bcm capacity plant. 

India Takes Advantage of Russian Oil Deals. Indian buyers, namely privately-owned Nayara Energy and state-controlled IOC (NSE:IOC), have bought another 5 million barrels of Russia’s medium sour Urals benchmark crude this week, with Urals still trading at a roughly $30 per barrel discount to Dated. 

Dutch ING to End Financing of Oil & Gas Projects. Dutch bank ING Groep (NYSE:ING) announced it would no longer finance oil and gas projects, the largest bank to have done so thus far, adding that it would concurrently target a 50% increase in lending for renewable energy projects by 2025. 

US Starts Buying Up Middle Eastern Fuel Oil. US refiners have started mopping up Middle Eastern fuel oil cargoes as a way of supplanting sanctioned Russian HSFO flows, with 4 million barrels from Saudi Arabia, Kuwait, and Iraq set to arrive in the US Gulf Coast next month, a third of the 2021 total. 

Indigenous Australians Sue $3.6 Billion LNG Project in South Korea. A group of Indigenous Australians took the Santos-led (STO) $3.6 billion Barossa gas project in offshore Australia to a South Korean court, asking the project’s South Korean lenders to block loans due to the field’s adverse environmental impact on wildlife. 

Germany Bets on Helicopter Money to Weather Energy Inflation. The German government finalized a deal that would see a one-off energy allowance of €300 ($330) for every taxpayer, subsidized public transportation, and temporarily curbed federal taxes on petrol as a policy response to ballooning energy costs.

Billionaires’ Mining Favorite Starts Drilling in Greenland. KoBold Metals, the mineral exploration company backed by Jeff Bezos and Bill Gates, stated it would begin drilling in Greenland, targeting nickel, cobalt, and platinum group metals to ease the feedstock pressure on electric vehicles. 

Red Tape Triggers Another Delay in Newfoundland/Labrador Auction. The Canadian government once again postponed bids for exploration blocks off the coast of Newfoundland and Labrador, assumed to hold 11 billion barrels of prospective oil resources, raising fears that Ottawa might hinder their development