Oil

SVB Fallout Spreads Through Energy Markets

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The collapse of Silicon Valley Bank and the risks of seeing other U.S. banks going down the drain have shaken the oil markets, sending WTI below $75 per barrel and Brent below the $80 per barrel mark. The oil narrative has been almost completely taken over by macro news, as even the relatively few newsworthy stories did not provide any surprises – OPEC oil demand growth is still 2.3 million b/d and U.S. oil inventories seem to be relatively stagnant.

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In its latest Monthly Oil Market Report, OPEC increased its 2023 oil demand growth forecast for China to a 0.71 million b/d year-on-year hike thanks to strong diesel and jet fuel increases, with the Asian powerhouse accounting for a third of global growth this year.

Iran’s oil minister Javad Owji stated the Middle Eastern country’s oil exports have reached the highest level since Donald Trump reimposed US sanctions in late 2018, averaging above 1 million b/d every month since November 2022.

Raking in $161.1 billion in 2022 net income, the Saudi national oil company Saudi Aramco (TADAWUL:2222) will boost capital expenditures to up to $55 billion, focusing on new production capacity in offshore oil and gas fields.

A group of EU members led by Germany and Italy are pushing for the relaxation of Euro 7 mandates that tighten limits on vehicle pollutants such as nitrogen oxides, which Brussels wants to see enacted by mid-2025 giving carmakers little time to adapt.

Less than 10 months after sanctioning phase one of the Plaquemines LNG project in Louisiana, the final investment decision for the 2nd phase totaling 10.7 mtpa of liquefaction capacity has been greenlighted this week after securing $7.8 billion in financing.

France has been paralyzed by ongoing protests against President Macron’s decision to raise the retirement age by 2 years to 64, with all four of its LNG import terminals blocked since last week, pushing front-month TTF prices back to €50 per MWh.

As India is buying increasing amounts of Russian oil and coal, the country’s authorities have asked banks and traders to avoid using Chinese yuan for energy imports and use the UAE dirham instead, due to long-standing political differences with its neighbor.

U.S. Senator Joe Manchin (D-WV) lambasted the deal between Chinese battery maker CATL (SHE:300750) and carmaker Ford (NYSE:F), saying that the 12% royalty rate would send $900 of the $7,500 EV tax credit that the IRA bill stipulates to China.

The Biden Administration approved a scaled-back version of ConocoPhilips’ $7 billion Willow oil and gas project in the northern part of Alaska that is estimated to hold 600 MMbbls, immediately triggering the ire of environmentalists.

Two of Great Britain’s largest pension funds threatened to vote against the renewal of top officials at BP (NYSE:BP) and Shell (LON:SHEL) unless both oil majors render their carbon emissions-cutting commitments more stringent.

U.S. restrictions on Chinese solar panels produced in the Xinjiang region decreased solar installations across the country by 16%, however, the markets are expecting a robust rebound in 2023 with 41% year-on-year growth aided by the Inflation Reduction Act.

Russian authorities claimed they’ve agreed to a 60-day extension of the Black Sea grain deal, expiring on March 18, out of “goodwill” and pressed the UN for the full resumption of fertilizer and ammonia exports.

The now-failed Silicon Valley Bank has been a major lender to community solar projects and its collapse could jeopardize the buildout of smaller than utility-scale solar farms, currently at a capacity of 5.6 GW.

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