Oil prices under pressure as China considers Russian crude

China made clear this week that it intends to buy more discounted Russian oil, putting some downward pressure on prices. Between China and India, Russia is racing to turn to Asia as the EU tries to ditch oil.

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Friday, May 20, 2022

So far, it has been India that has bought heavily discounted Russian crude, leaving markets speculating on whether Moscow can pivot fully to Asia. This week, however, China made headlines as Beijing launched direct government-to-government talks to buy discounted crude to “replenish strategic inventories”. This added some downward pressure to oil prices despite the imminent reopening of China, as ICE Brent crude traded around $112 a barrel on Friday.

EU launches $220 billion plan to ditch Russia’s fossil fuels. European Commission unveil Its $220 billion plan to end Russia’s reliance on fossil fuels by 2027 includes $120 billion for new renewable energy projects, $30 billion for the grid and $59 billion for energy savings and heat pumps.

U.S. will ease sanctions on Venezuela. Biden administration plan allowEuropean companies are still operating in Venezuela to move more oil to the continent, while U.S. oil majors Chevron (NYSE: CVX) Will be allowed to negotiate the resumption of activities in the Latin American country.

Moscow said the tariffs would trigger higher prices. Top Russian authorities have claimed that U.S. proposals to impose tariffs on Russian oil will result in buyers having to pay more, as the cost of tariffs will be factored into the final price.

The United Nations has called for a global end to fuel subsidies. United Nations Secretary-General Antonio Guterres urge Governments ending fossil fuel subsidies, which have climbed to $500 billion globally, seek to increase pressure on polluters ahead of the COP27 climate conference in Egypt in November.

ADNOC announces biggest discovery of the year. ADNOC, the national oil company of the United Arab Emirates Announce The three discoveries totaled 650 million barrels, the largest of which added 500 million barrels to reserves at the Bu Hasa onshore field, meaning Murban could export more in coming years.

China plans to use Russian crude oil for strategic reserves. According to Bloomberg Reportthe Chinese government is in direct talks with Russian authorities to start buying additional crude supplies to replenish China’s strategic stockpiles.

Occidental oil enters blocks offshore Colombia. Colombian state oil company Ecopetrol (NYSE: ECO) declare it to be Team up Going hand in hand with US oil majors Occidental (NYSE: OXY) Development of four deepwater blocks offshore Colombia, with the latter acting as the block operator.

Shell’s Brazilian Sea Wildcat failed to impress. BP drills three exploratory wells Shell (London: SHEL) Three offshore blocks in Brazil costing more than $1 billion, all turn around The country suffered another setback after Exxon Mobil’s $1.6 billion drilling program failed.

ADNOC to build new giant LNG facility. ADNOC, the national oil company of the United Arab Emirates, has announced that it will build a new LNG facility in Fujairah with a capacity of 9.6 million tonnes per annum, adding to the country’s current 5.8 mtpa capacity once the planned liquefaction plant comes on stream in 2027 more than double.

Iron ore surged on lower mortgage rates in China. China unexpectedly cuts 5-year loan prime rate by 15 basis points to 4.45%, China iron ore futures RoseApparently on hopes of a faster-than-expected recovery in construction activity, the June contract rose 6% to $127/t today.

ExxonMobil to sell Barnett shale assets for $750 million. In widely expected move, U.S. oil major ExxonMobil (NYSE: XOM) The sale of its Barnett shale gas assets to Thai-owned producer BKV Corp for $750 million, well above its $500 million assessment last year, due to rising natural gas prices.

Iraq seeks legal action to take control of Kurdistan. Iraqi oil ministry it is said Appointed law firm Cleary Gottlieb Steen and Hamilton to approach oil and gas companies active in Iraqi Kurdistan to renegotiate their contracts and bring them into compliance with applicable Iraqi law, bypassing the KRG.

Half of Russia’s gas buyers open new bank accounts. Deputy Prime Minister of Russia statement that half Gazprom (MCX:GAZP) European gas buyers have opened accounts with Gazprombank in foreign currencies and rubles, possibly hinting at new modus operandi in the EU-Russia standoff.

Vitol can stay in Mexico after naming a bribe-taker. Global trading company Vitol can continue to operate in Mexico, according to To the country’s president, AMLO, who named officials who allegedly took bribes and possibly paid $30 million in compensation between 2015-2020.

By Tom Kool for Oilprice.com

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