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Energy and commodities highlights: Oil price and politics, Permian pipelines, batteries and tariffs

Summary:
As world leaders and oil company executives gathered at the St Petersburg Economic Forum from June 6, major figures in the world of oil staked out their position on issues of pricing and supply. Russian President Vladimir Putin put the onus on Saudi Arabia to make the case for continuing a supply cut agreement set to expire at month’s end, saying that Russia could do fine with an oil price in the range of -65/b. Lukoil CEO Vagit Alekperov said at the forum that -/b was a “comfortable” price and that he saw no need for the OPEC/non-OPEC pact to raise output. Their comments come following a sharp decline in oil prices, with Brent crude futures shedding around /b in the 10 days preceding the conference. Meanwhile, Rosneft CEO Igor Sechin highlighted the need for greater energy

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As world leaders and oil company executives gathered at the St Petersburg Economic Forum from June 6, major figures in the world of oil staked out their position on issues of pricing and supply.

Russian President Vladimir Putin put the onus on Saudi Arabia to make the case for continuing a supply cut agreement set to expire at month’s end, saying that Russia could do fine with an oil price in the range of $60-65/b.

Lukoil CEO Vagit Alekperov said at the forum that $60-$70/b was a “comfortable” price and that he saw no need for the OPEC/non-OPEC pact to raise output.

Their comments come following a sharp decline in oil prices, with Brent crude futures shedding around $7/b in the 10 days preceding the conference.

Meanwhile, Rosneft CEO Igor Sechin highlighted the need for greater energy cooperation between Russia and China.

“With oil production growth and respective increase in hydrocarbons trading, we’ll be able to establish new marker blends and impact price setting,” Sechin said.

Sechin added that trading in the countries’ currencies would give the ruble and the yuan greater status and reduce the risk of exposure to US sanctions by avoiding dollar transactions.

Both countries’ relations with the US have soured, affecting energy trade flows and investment. US sanctions targeting Russian upstream development are showing some signs of discouraging collaboration between Russian and Western firms, while there seems to be no end in sight to the US-China trade spat.

Go deeper: Read S&P Global Ratings’ report on global economic fallout of trade tensions

GRAPHIC OF THE WEEK

The US Permian basin is set for an extensive build-out of pipelines to transport growing natural gas production. The 2Bcf/d Whistler pipeline cleared a final investment decision in the first week of June, but another 8.25Bcf/d in planned expansion capacity in the region has yet to receive approval.

Energy and commodities highlights: Oil price and politics, Permian pipelines, batteries and tariffs

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LISTEN: US OFFSHORE OIL AND GAS DEVELOPMENT

In the latest Capitol Crude podcast, S&P Global Platts editors Brian Scheid and Gary Gentile talk to US industry representatives about US offshore policy and how developers are pushing for greater access in the eastern Gulf of Mexico.


METALS/ELECTRICITY

Possible US tariffs could hike battery storage system costs 15-18%

If the Trump administration’s threats to raise to 25% US tariffs on Chinese imports of lithium-ion batteries and inverters were to become reality, the installed price for a four-hour duration battery would increase by about 15%, an analyst at S&P Global Platts Analytics said.

SHIPPING

Ship insurers ‘already charging’ war risk premium around Fujairah

Shipping and maritime insurers have already started charging war risk premiums in the waters around the Middle East bunkering hub of Fujairah after the insurance coverage area was expanded to include the Persian Gulf and the Gulf of Oman, according to industry executives.

PETROCHEMICALS

Asian petrochemical makers’ switch to cheaper LPG set to pressure naphtha cracks

Asian petrochemical makers’ growing use of LPG over naphtha as a feedstock, along with ample LPG supply from the US, will pressure Asian naphtha cracks over the coming months, according to market participants.

AGRICULTURE

Price rally, farm aid whet US farmers’ appetite to extend corn plantings

A rebound in global corn prices to three-year highs and the recent announcement of a farm aid package by Washington is likely to encourage US farmers to plant corn beyond their final dates in an effort to dilute the damage from record low plantings, analysts said.

THE LAST WORD

“We cannot get ahead of ourselves. We have to see if we can prove these business hypotheses.” 

Ben van Beurden, Shell CEO, managing expectations of the oil and gas giant’s pivot towards electricity at a company event in London on June 4. Van Beurden said the power business could become “significant” for Shell in the near future, but the approach to spending would be cautious.

The post Energy and commodities highlights: Oil price and politics, Permian pipelines, batteries and tariffs appeared first on Platts Insight.

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