Oil Prices Under Pressure As U.S. Dollar Strengthens

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Oil prices are under pressure as the U.S. dollar continues to strengthen and fears of a higher-for-longer interest rate weight on demand expectations, reports OilPrice.com

US bonds surged this week with the 10-year US Treasury yields jumping to 4.55%, adding strength to the US dollar vis-a-vis other currencies and pushing the dollar index to its highest since November last year. The dollar strength has prompted the US Federal Reserve to signal another interest rate hike before year-end, and “higher for longer” rate concerns have been tangibly weighing on oil prices, as ICE Brent fell back to $92 per barrel.

According to the IEA, production of biofuels has been increasing by an average annual rate of 4% over the past five years, but its 2050 net zero target would need that growth to be triple what it is currently, at 13% per year.

US oil major Chevron (NYSE:CVX) expects to add 65,000 b/d of crude production in Venezuela by the end of next year, as laxer sanctions allow it to start the first major drilling campaign in the country, although sourcing drilling rigs might be a problem.

Seeking to soften the impact of last week’s diesel and gasoline export ban, Moscow has tinkered with its curbs in a new set of regulations, lifting export restrictions on some bunkering fuels as well as on gasoils with high sulfur content.

Canada’s Energy Regulator has approved an updated plan from the Trans Mountain Corporation that changes a 0.8-mile pipeline section south of Kamloops, BC, enabling TMX to come online by the end of next year.

Shale pioneer Harold Hamm has called for the end of back-and-forth energy policy coming from the White House, arguing that the Biden-era rule of not drilling on federal lands should be overturned as restricted land availability increases energy costs.

Following emergency repairs at an unnamed unit of the 300,000 b/d Bandar Abbas refinery, one of the largest in Iran, a blast killed one worker and injured four. Iran’s state media announced there was no impact on refinery production.

Despite mounting calls for a US policy revamp on offshore wind projects, the Biden administration reiterated its intent to hold three promised wind lease sales in the Central Atlantic, off the Pacific coast of Oregon, and in the Gulf of Maine in 2024.

Uruguay, A country that has never yielded a commercial hydrocarbon discovery, is finalizing 7 new offshore exploration licenses that will see the arrival of Shell (LON:SHEL) or APA (NASDAQ:APA) in the country, hoping for a new Namibia.

Merely a month after a deadly coal mine explosion in China’s Shaanxi, 16 people were killed in another coal mine collapse in the southwestern Guizhou province, leading to suspended production in a region that accounts for 5% of the country’s coking coal output.

EU countries have agreed to a new set of emission rules labeled “Euro 7” that would introduce new standards on particle emissions from brakes and tires, advancing the regional bloc’s collective 2035 target of banning sales of carbon-emitting vehicles.

Chinese iron ore futures plunged to ¥845 per metric tonne ($115/mt) as weaker-than-expected steel consumption in the peak demand months of September-October might prompt Beijing to mandate lower steel production in the country.

The worsening congestion of tankers idling outside of the Panama Canal has lifted VLGC freight rates from the US into Japan to the highest since 2015, reaching 245 per metric tonne this week, with a two-week demurrage costing shippers almost $2 million.

Indonesia launched its own carbon emission trading mechanism as the Asian country aims to limit coal utilization at home and reach net zero by 2060, with prices opening around $4.5 per mtCO2 on the first day of trading.