Oil markets set for bull run

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Following several weeks of macro-driven weakness, this week has finally brought something more tangible to oil markets. Namely, a substantial OPEC+ market intervention. Reports put the potential cut in OPEC+ production targets at around the 1 million bpd mark. This potential reduction in OPEC+ production will combine with Russian sanctions kicking in and the US SPR release running its course to add real upward pressure to oil prices. 

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OPEC+ Is Serious About a Huge Cut. Meeting in person for the first time since March 2020, the OPEC+ meeting in Vienna this week is expectedto see the largest coordinated downward revision in years as the oil group is reportedly considering a 1 million b/d cut for November 2022. 

Israel-Lebanon Maritime Deal Really Could Happen. Following several years of shuttle diplomacy, US envoy Amos Hochstein has presentedIsrael and Lebanon with a draft agreement on how to split a 330-square-mile disputed area in the Eastern Mediterranean, nearing a resolution to the longtime row. 

White House Restarts the Fuel Price Blame Game. The Biden Administration has stirred up emotions in the oil industry again after Energy Secretary Jennifer Granholm blamed majors for their failure to maintain sufficient fuel inventories, increasing the odds of regulatory caps on fuel exports out of the US.

IEA Forecasts Huge Gas Demand Drop.The International Energy Agency has forecasta 10% decline in European gas demand, the largest year-on-year drop on record, followed by a further 4% decrease in 2023, with most of the losses coming from the continent’s embattled industry. 

Nord Stream Rupture the Largest Methane Release Ever. The UN’s International Methane Emissions Observatory statedthat the ruptures on the Nord Stream pipelines 1 and 2 are most likely the biggest single release of methane in history, leaking at a rate of 22,920 kg per hour. 

California Mulls Windfall Profit Tax.Seeking to react to a sudden increase in gasoline prices, California Governor Gavin Newsom is planning to introduce a windfall profit tax on oil companies in the form of a higher tax rate on earnings for the given year, the first state to do so across the country.

Prepare for a Huge Chinese Export Spike. Beijing at last issueda massive 15-million-ton export quota for refiners, the largest single allocation in 2022, paving the way for a ramp-up in Chinese crude demand and refinery runs. 

Things Turn Hot Again in Libya.The decision of Libya’s Tripoli government to signa preliminary deal on energy exploration with Turkey was met with unprecedented fury as governments in Greece and Egypt, as well as Libya’s concurrent government in Benghazi, have protested against drilling in contested waters.  

Prisoner Swap Eases US-Venezuela Tensions. A high-level exchange of prisoners that saw five Citgo employees released in return for two Venezuelans (nephews of Venezuela’s first lady Cilia Flores) has markedanother step toward a normalization of relations between the US and Venezuela.

Iron Ore Remains Surprisingly Stable. Whilst other commodities have been caught up in the turmoil of recession fears, iron ore has been surprisingly stableover the past two months, with 62% iron ore trading slightly below $100/mt as the good and bad news coming out of China seem to offset one another. 

Chinese Delisting Starts in London.A mere month after rumors of Chinese companies delisting from Western exchanges emerged, the Asian country’s largest refiner CNPC (SHA:600028)indicatedit would delist its American Depositary Shares (ADSs) from the London Stock Exchange. 

Australian Profits Soar on Fossil Boom. All the ramifications of the Russia-Ukraine war in 2022 so far have boostedthe economic outlook of Australia as thermal coal revenue is set to jump 35% year-on-year (to A$62 billion) whilst the value of LNG exports is expected to increase by 30%. 

Saudi Arabia Talks Spare Capacity Again. Reminding the oil industry of supply fundamentals, Saudi Aramco (TADAWUL:2222) CEO Amin Nasser arguedthat the remaining spare production capacity has shrunk to as little as 1.5% of global demand. OilPrice.com.