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Tag: Energy markets

  • ‘I can’t afford cooking gas,’ shutdown of Kenya’s Koko biofuel firm wipes out clean cooking options

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    NAIROBI, Kenya — It was designed to be as simple as buying airtime: a quick tap on the dispenser, a few shillings and a cooking canister refilled. Now, more than 3,000 Koko fuel supply points across Kenya sit idle, with no fuel and no clear answers for the households that relied on them.

    For more than a decade, Koko Networks helped shift over 1.5 million Kenyan homes without access to public gas systems away from smoky charcoal stoves to bioethanol, marketed as a cleaner, modern way to cook. The steady blue flame became a symbol of Kenya’s push toward cleaner household energy.

    That promise has dimmed.

    After failing to win government letter of authorization that would allow them to sell carbon credits — permits that allow holders to emit certain amount of greenhouse gases — Koko abruptly shut down its fuel distribution network, bringing to a halt a model once hailed as a poster child of Africa’s green transition.

    In Kibera, Nairobi’s largest informal settlement, most Koko Networks outlets have closed, and some have removed the bioethanol dispensers altogether. Since 2014, Koko had imported bioethanol products. That ended abruptly in 2023 when the government withheld its import permit, forcing Koko to use local sources that were erratic and more expensive.

    That reality is setting in for Fredrick Onchenge. He used to serve up to 50 Koko customers a day. Now his machines are silent.

    “Initially, I was confused,” Onchenge said. “Then it dawned on me what had just happened. My livelihood was gone. I tried calling the salesperson, but their phone was switched off.”

    For many customers, their access ended with a text message announcing the shutdown. Kitchens that once cooked meals without smoke now have idle double-burner stoves — reminders of a system that stopped overnight.

    Grace Kathambi is weighing her options.

    “This was a life changer for me,” Kathambi said. “I could not afford the $8 needed to refill a gas cylinder, and Koko was my best alternative. With about 30 U.S. cents, I could buy enough Koko fuel to cook.”

    With the bioethanol supply cut off, households like hers must now choose between returning to charcoal or finding money for more expensive liquefied petroleum gas.

    “I cannot afford to use gas,” said Margaret Auma. “Koko made life very easy for those of us who earn little from casual jobs. We feel abandoned, yet it’s not our fault.”

    For weeks, Koko and the Kenyan government haggled over a crucial letter authorizing carbon credits and import permits for bioethanol made from molasses, a sugarcane by-product. The company needed those approvals to unlock millions of dollars in international financing that helped keep fuel prices low. Kenyan authorities held back, citing broader concerns about the credibility of carbon credits.

    Koko — which counted the Microsoft Climate Innovation Fund, and South Africa’s Rand Merchant Bank as its investors, announced on Jan. 30 that without the approvals its business model was financially unsustainable and it was shutting down.

    “Koko’s case is uniquely multidimensional,” said David Ndii, Kenya’s presidential advisor on economic affairs. Ndii cited issues including the Paris Agreement framework, questions around the credibility of cookstove carbon credits, Kenya’s climate policies, carbon market regulations, the transparency of Koko’s business model and diplomatic considerations.

    He dismissed the prospect of state intervention, saying, “Even good doctors lose patients.”

    Kenya’s energy and treasury officials have declined to comment on the closure, which energy analysts say exposes weaknesses in how clean cooking is financed across Africa.

    “The clean cooking situation in Kenya, and across Africa is a serious crisis,” said Amos Wemanya, a senior analyst on renewable energy at Power Shift Africa. “This is not just about emissions or climate targets. It is about development, health, dignity and household survival.”

    Wemanya said models heavily reliant on carbon credits risk prioritizing markets over people.

    “We are not going to solve the clean cooking challenge through carbon math or carbon credit spreadsheets,” he said. “Carbon markets allow polluters to continue emitting while households, who are supposed to be the beneficiaries, still pay for the stoves and bear the risks when projects fail.”

    When such systems collapse, he added, it is households that suffer most.

    “They are the ones forced to revert to harmful alternatives like charcoal and paraffin,” Wemanya said.

    He said the Koko episode shows the priority should shift toward affordable electricity, especially in rural areas.

    “Clean cooking will not be solved through carbon credits,” he said. “The reality is that gas-based solutions were never a long-term climate solution. They simply shift households from firewood to imported fossil fuels. So, the bigger lesson here is that we need to move toward systems that truly work, primarily electricity powered by renewable energy.”

    For now, households like Auma’s must now choose between returning to charcoal or finding money for more expensive LPG.

    “What are we supposed to do? Go back to using charcoal in our one-room houses?” Auma asked. “That is the smoke and sickness we were trying to escape.”

    ____

    The Associated Press’ climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.

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  • Asian shares are mixed and US futures edge higher after Wall Street steadies

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    BANGKOK — Asian shares were mixed Friday after Wall Street broke a two-day losing streak and edged back toward record levels, helped by advances for Big Tech companies like Nvidia.

    U.S. futures advanced and oil prices slipped.

    Tech shares regained momentum after Taiwan Semiconductor Manufacturing Co., a major supplier to the industry, reported strong profits and investment plans. TSMC gained 3% early Friday and Taiwan’s benchmark Taiex was up 1.9%.

    The frenzy around AI has sent Nvidia and other superstar stocks to dizzying heights, stirring criticism that their prices had shot too high. Nvidia rose 2.1% on Thursday after TSMC’s Chief Financial Officer Wendell Huang said it’s seeing “continued strong demand” in an encouraging signal for the entire AI industry.

    TSMC’s stock that trades in the United States rose 4.4% on Thursday.

    The gains also followed the signing of a U.S.-Taiwan trade deal involving $250 billion in new investments by Taiwan’s semiconductor and tech companies in the U.S. In exchange, the Trump administration will cut tariffs on Taiwanese goods. The deal aims to establish a strategic economic partnership and upgrade U.S. industrial infrastructure.

    In Tokyo, the Nikkei 225 shed 0.3% to 53,936.17, while Hong Kong’s Hang Seng gave up 0.6% to 26,770.56. The Shanghai Composite index lost 0.3% to 4,101.91.

    China is due to report its economic growth data for 2025 on Monday. Forecasts are for the economy to have expanded at about a 4.5% annual pace, slowing from earlier in the year.

    Elsewhere in Asia, South Korea’s Kospi rose 0.9% to a record 4,840.74. The benchmark has been trading at record highs for weeks, helped by a recovery in confidence in AI-related shares. Samsung Electronics gained 3.5%.

    In Australia, the S&P/ASX 200 gained 0.5% to 8,903.90. India’s Sensex rose 0.4%.

    Wall Street steadied on Thursday as stocks related to artificial-intelligence bounced back.

    The S&P 500 rose 0.3% and the Dow Jones Industrial Average added 0.6%. The Nasdaq composite rose 0.2% to 23,530.02.

    Easing oil prices also helped to calm investors’ jitters.

    Early Friday, a barrel of benchmark U.S. crude cost $59.21, up 14 cents from a day earlier. It sank 4.6% on Thursday after Trump said he had heard “on good authority” that plans for executions in Iran had stopped amid widespread protests against the country’s leadership.

    Brent crude, the international standard, added 10 cents to $63.86 per barrel. It dropped 4.1% on Thursday.

    Financial markets took Trump’s comments about Iran as a signal that tensions flaring above some of the world’s largest oil deposits could ease, which in turn could lower the possibility of disruptions to oil supplies.

    Earnings reporting season for big U.S. companies continued to pick up pace, meanwhile, with several more big financial companies delivering their results for the last three months of 2025.

    “As we dive into the heart of earnings season in the coming weeks, tech results will be scrutinized in far greater detail.,” Ipek Ozkardeskaya of Swissquote said in a commentary.

    “Concerns around circular AI deals, leverage and delayed returns on investment remain front of mind for investors. These are compounded by rising electricity and metals costs, higher memory-chip prices, and the risk of supply disruptions,” she said.

    BlackRock, the giant that’s now overseeing more than $14 trillion in investments, rose 5.9% after reporting stronger profit and revenue than analysts expected.

    Encouraging reports on the U.S. economy contributed to the upbeat mood.

    One said fewer workers applied for unemployment benefits last week in an indication layoffs may be slowing. Other reports said manufacturing was significantly stronger in the mid-Atlantic region and in New York state than economists had forecast.

    The stronger-than-expected data on the U.S. economy helped stocks of smaller companies to lead the market. Their profits can be tied more closely to the strength of the U.S. economy than their bigger, multinational rivals, and the Russell 2000 index rose 0.9%.

    In other dealings early Friday, the U.S. dollar fell to 158.19 Japanese yen from 158.63 yen.

    The euro rose to $1.1614 from $1.1609.

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  • Enbridge $1.4 Billion Project Aims to Boost Canadian Oil Flow to U.S. Refineries

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    Pipeline operator Enbridge ENB 0.51%increase; green up pointing triangle will push ahead with a $1.4 billion expansion of its core network to boost deliveries of Canadian heavy oil and reach key refining markets in the U.S. Midwest and Gulf Coast.

    The Canadian energy company said Friday it reached a final investment decision on the first phase of a project to optimize its Mainline network, which is forecast to add egress capacity from Canada that will support increased production in the country and connect with what it described as the best refining markets in North America.

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    Robb M. Stewart

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  • China Is Filling Up Its Oil Reserves Fast

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    China has spent months building up its oil reserves. That might come in handy in the wake of the new sanctions the U.S. recently imposed on Russian crude.

    During the first nine months of the year, the world’s second-largest economy imported on average more than 11 million barrels of oil a day, an amount above the daily production of Saudi Arabia, according to official customs data. Analysts estimate 1 million to 1.2 million of those barrels were stashed in reserves each day.

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    Rebecca Feng

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  • Pump prices could rise after US, EU hit Russian oil companies with new sanctions and oil spikes

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    Oil prices spiked Thursday after the U.S. announced massive new sanctions on Russia’s oil industry in an attempt to get Russian President Vladimir Putin to the negotiating table and end Moscow’s brutal war on Ukraine.U.S. benchmark crude jumped 6%, to $62 per barrel midday Thursday and analysts say if the situation remains static, U.S. consumers will soon be paying more at the pump.Patrick De Haan, head of petroleum analysis for GasBuddy, said while it was difficult to predict with certainty because of the number of moving parts, consumers will likely see a bump in prices as early as next week, if not sooner.“We’ll probably start to see motorists be impacted by the sanctions at the pump in the next couple days and it might take five days for that to be fully passed along,” De Haan said, adding that the full impact also depends on whether the Russian or U.S. positions change.“Russia will feel pressure to come to the table in light of the new developments or President Trump may react when he sees oil prices rising to levels that become uncomfortable, so I don’t think this is going to be very long lasting,” De Haan said.Oil prices have been relatively low for the past few years and last week the cost for barrel of U.S. benchmark crude fell below $57, its lowest level since early 2021. The price for a barrel of U.S. benchmark crude did rise near $79 a barrel early this year, just before President Donald Trump took office, a price not necessarily considered outrageously elevated by most analysts.The broad, extended decline in oil prices pushed the average price for a gallon of gas in the U.S. last week under $3 for the first time since December of last year, according to GasBuddy.For much of 2025, inflation has been held mostly in check, partly due to cheaper prices at the pump. However, that could change quickly as higher energy costs have a downstream effect on prices for virtually all products and services across industries.“The impact to a lot of Americans is that products derived from crude, gasoline, diesel and jet fuel are all likely to see price increases,” De Haan said.The main reason oil and gas have stabilized at lower levels this year is that the group of countries that are part of the OPEC+ alliance of oil-exporting countries have continued to boost production. Earlier this month, OPEC+ leaders announced they would raise oil production by 137,000 barrels per day in November, the same amount announced for October. The group has been raising output slightly in a series of boosts all year after announcing cuts in 2023 and 2024.Russia is the leading non-OPEC member in the 22-country alliance. The group’s next meeting is scheduled for Nov. 2.The sanctions against Russian oil giants Rosneft and Lukoil follows calls from Ukrainian President Volodymyr Zelenskyy as well as bipartisan pressure on Trump to hit Russia with harder sanctions on its oil industry, the economic engine that has allowed Russia to continue to execute the grinding conflict even as it finds itself largely internationally isolated. The European Union on Thursday announced its own measures targeting Russian oil and gas.The price for Brent crude, the international standard, rose $3.57 on Thursday to $66.15 per barrel.

    Oil prices spiked Thursday after the U.S. announced massive new sanctions on Russia’s oil industry in an attempt to get Russian President Vladimir Putin to the negotiating table and end Moscow’s brutal war on Ukraine.

    U.S. benchmark crude jumped 6%, to $62 per barrel midday Thursday and analysts say if the situation remains static, U.S. consumers will soon be paying more at the pump.

    Patrick De Haan, head of petroleum analysis for GasBuddy, said while it was difficult to predict with certainty because of the number of moving parts, consumers will likely see a bump in prices as early as next week, if not sooner.

    “We’ll probably start to see motorists be impacted by the sanctions at the pump in the next couple days and it might take five days for that to be fully passed along,” De Haan said, adding that the full impact also depends on whether the Russian or U.S. positions change.

    “Russia will feel pressure to come to the table in light of the new developments or President Trump may react when he sees oil prices rising to levels that become uncomfortable, so I don’t think this is going to be very long lasting,” De Haan said.

    Oil prices have been relatively low for the past few years and last week the cost for barrel of U.S. benchmark crude fell below $57, its lowest level since early 2021. The price for a barrel of U.S. benchmark crude did rise near $79 a barrel early this year, just before President Donald Trump took office, a price not necessarily considered outrageously elevated by most analysts.

    The broad, extended decline in oil prices pushed the average price for a gallon of gas in the U.S. last week under $3 for the first time since December of last year, according to GasBuddy.

    For much of 2025, inflation has been held mostly in check, partly due to cheaper prices at the pump. However, that could change quickly as higher energy costs have a downstream effect on prices for virtually all products and services across industries.

    “The impact to a lot of Americans is that products derived from crude, gasoline, diesel and jet fuel are all likely to see price increases,” De Haan said.

    The main reason oil and gas have stabilized at lower levels this year is that the group of countries that are part of the OPEC+ alliance of oil-exporting countries have continued to boost production. Earlier this month, OPEC+ leaders announced they would raise oil production by 137,000 barrels per day in November, the same amount announced for October. The group has been raising output slightly in a series of boosts all year after announcing cuts in 2023 and 2024.

    Russia is the leading non-OPEC member in the 22-country alliance. The group’s next meeting is scheduled for Nov. 2.

    The sanctions against Russian oil giants Rosneft and Lukoil follows calls from Ukrainian President Volodymyr Zelenskyy as well as bipartisan pressure on Trump to hit Russia with harder sanctions on its oil industry, the economic engine that has allowed Russia to continue to execute the grinding conflict even as it finds itself largely internationally isolated. The European Union on Thursday announced its own measures targeting Russian oil and gas.

    The price for Brent crude, the international standard, rose $3.57 on Thursday to $66.15 per barrel.

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  • Standard Chartered Bucks Bearish Trend, Forecasts Oil Price Gains in 2026

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    We are in the final innings of the third quarter, and energy markets remain tepid amid bearish sentiment. Brent crude for November delivery was trading at $69.45 per barrel at 8.45 am ET on Friday, more than $10/bbl below the current year’s peak at ~81/bbl, while WTI crude was changing hands at $65.05 per barrel compared to the January peak of $78.71 per barrel. Oil prices have mostly traded ~15/bbl lower in 2025 compared to the previous year, primarily due to oversupply fears due to OPEC+ accelerating the unwinding of production cuts, coupled with sluggish global economic growth and heightened trade tensions that suppressed oil demand, leading to ample global supply outweighing demand. Increased output from non-OPEC+ countries also contributed to a build-up of oil inventories. Lately, Wall Street has been warning that oil markets could soon face a surplus, putting more pressure on already depressed oil prices. To wit, Goldman Sachs has predicted that oil markets could be oversupplied by 1.9 million b/d in 2026 amid OPEC+ unwinding production cuts and production in the Americas rising. Wall Street now sees oil prices sinking to the $50s per barrel next year, further compounding this year’s decline.

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    In sharp contrast, commodity analysts at Standard Chartered have predicted that oil prices will move higher in the coming year driven by robust demand and a raft of economic stimulus measures.

    StanChart notes that U.S. supply has hit an all-time high in the current year, but is predicting that producers will be forced to cut output due to prevailing low oil prices. On the demand side, expectations of weaker global demand in the final quarter of the year, driven by trade wars and tariffs, are likely to trigger a raft of economic stimulus in the form of rate cuts in the United States and potential for China to respond with a package of measures. Further, Ukraine’s targeted attacks on Russian energy infrastructure have forced Russia to cut refinery runs and ramp up crude exports. According to StanChart, vessel-tracking data suggests that Russia’s seaborne crude exports jumped to a 16-month high at 3.62 million barrels per day (mb/d) in August. The analysts note that Ukrainian attacks have also focused on both pipeline pumping stations and export terminals, which would pressure crude loadings further if they become significant enough to halt flows for extended periods. Meanwhile, an escalation in the unfolding tensions between Europe and Russia is likely to increase the risk premium for crude oil and natural gas.

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  • The Black Market for Oil Blunts Trump’s India Tariffs

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    Based on what’s happening in the black market for oil, the White House’s new import levy on India is backfiring.

    President Trump last week doubled India’s tariff rate to 50% to punish it for buying sanctioned Russian oil. Indian refineries have become major buyers of Moscow’s crude since the war in Ukraine began.

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    Carol Ryan

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  • Stock market today: Wall Street falls from its records as oil prices tumble and tech stocks drop

    Stock market today: Wall Street falls from its records as oil prices tumble and tech stocks drop

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    NEW YORK (AP) — Wall Street pulled back from its records on Tuesday after the price of crude oil tumbled and technology stocks faltered.

    The S&P 500 fell 0.8%, a day after setting an all-time high for the 46th time this year. The Dow Jones Industrial Average dropped 324 points, or 0.8%, and the Nasdaq composite sank 1%.

    Exxon Mobil dropped 3%, and energy stocks fell to some of Wall Street’s sharpest losses after oil prices tumbled more than 4%. A barrel of Brent crude, the international standard, has fallen back below $75 from more than $80 last week.

    Crude prices have been weakening as China’s flagging economic growth raises concerns about demand for oil. At the same time, worries have receded about Israel possibly attacking Iranian oil facilities as part of its retaliation against Iran’s missile attack early this month. Iran is a major producer of crude, and a strike could upend its exports to China and elsewhere.

    Nvidia was the heaviest weight on the S&P 500 and fell 4.5%. It’s a cooldown for the chip company, whose stock is still up 166.2% for the year so far on euphoria about the profits created by the boom around artificial-intelligence technology.

    Stocks for companies across the chip industry fell after Dutch supplier ASML reported its latest quarterly results. CEO Christophe Fouquet said AI continues to offer strong upside potential, but “other market segments are taking longer to recover,” and ASML’s stock trading in the United States fell 16.3%.

    Also dragging on the U.S. stock market was UnitedHealth Group. The insurer dropped 8.1% despite reporting better results for the latest quarter than analysts expected. It lowered the top end of its forecasted range for profit over the full year.

    Helping to keep the S&P 500 and Dow close to their records set on Monday were gains for several financial companies following better-than-expected profit reports for the summer.

    Charles Schwab jumped 6.1%. More customers opened brokerage accounts at the company, helping to bring its total client assets to a record $9.92 trillion. Bank of America added 0.5%, and CEO Brian Moynihan said his company benefited from higher average loans and fees for investment banking and asset management.

    Walgreens Boots Alliance was another winner, up 15.8%, after topping analysts’ forecasts. The drugstore chain also said it will close about 1,200 locations over the next three years as it tries to turn around its struggling U.S. business.

    Chipmaker Wolfspeed jumped 21.3% to trim its loss for the year to 68.3% after the Biden-Harris administration announced plans to provide up to $750 million in direct funding to the company. The money will support its new silicon carbide factory in North Carolina that makes the wafers used in advanced computer chips.

    In the bond market, trading of Treasurys resumed after a holiday on Monday, and yields sank following a weaker-than-expected report on manufacturing in New York state.

    The yield on the 10-year Treasury fell to 4.03% from 4.10% late Friday. Manufacturing has been one of the areas of the U.S. economy hurt most by high interest rates caused by the Federal Reserve in its efforts to slow the economy enough to stamp out high inflation.

    Now, though, the Fed has begun cutting interest rates as it’s widened its focus to include keeping the economy humming instead of just fighting high inflation. It looks set to continue cutting rates through next year, which would ease the brakes further off the economy.

    Recent reports showing the U.S. economy remains stronger than expected have raised optimism that the Fed can pull off a perfect landing where it gets inflation down to 2% without causing a recession that many had thought would be necessary.

    Because of expectations for continued growth for the U.S. economy, as well as the boost that lower rates can give to corporate profits and prices for stocks, strategists at UBS raised their forecast for how high the S&P 500 could go this year and next.

    Led by Jonathan Golub, they’re calling for the S&P 500 to rise to 5,850 by the end of the year, up from their prior forecast of 5,600.

    The S&P 500 finished Tuesday at 5,815.26 after falling 44.59 points. The Dow dropped 324.80 to 42,740.42, and the Nasdaq composite sank 187.10 to 18,315.59.

    In stock markets abroad, Chinese stocks fell sharply as doubts continue about whether the government will offer enough fiscal stimulus to prop up the world’s second-largest economy.

    Stocks in Shanghai fell 2.5%, and Hong Kong’s Hang Seng index dropped 3.7%.

    Indexes were mixed elsewhere in Asia and in Europe.

    ___

    AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

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  • Oman state-run oil firm OQ will make initial public offering and potentially seek billions

    Oman state-run oil firm OQ will make initial public offering and potentially seek billions

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    DUBAI, United Arab Emirates — An Omani state-run oil and gas company announced Monday it will make an initial public offering of its exploration and production business, potentially seeking billions in a major move toward privatization in the sultanate.

    OQ, formerly known as the Oman Oil Co., follows moves by the Saudi oil giant Aramco and the Abu Dhabi National Oil Co. to seek to raise money through the markets. It also could provide a boost for its local Muscat Stock Exchange, long viewed as being the sleepiest among the Gulf Arab states.

    OQ will offer up to 25% of shares in its exploration and production arm, the announcement said. It offered no proposed values for the deal, though Bloomberg quoted anonymous officials with knowledge of the deal suggesting the company could be worth an overall $8 billion, making the stake being put up worth some $2 billion.

    “The intention to float OQ Exploration and Production reflects our commitment to unlocking new opportunities for growth, both for the company and for the sultanate of Oman,” OQ CEO Ashraf Hamed Al Mamari said in a statement.

    The plan calls for the listing to take place in October, pending regulatory approvals. It plans dividends of $150 million for the first two quarters after that, with a planned dividend of $600 million annually, plus one linked to its performance.

    OQ was founded in 2009 and is Oman’s third-largest firm in the oil industry, following the state-owned Petroleum Development Oman and U.S. firm Occidental Petroleum.

    Oman, on the eastern edge of the Arabian Peninsula, is a member of the OPEC+ coalition, though not a member of the cartel itself. It produces around 1 million barrels of oil a day and China remains the top client for its crude.

    Oman’s late Sultan Qaboos bin Said used oil revenues to modernize a nation that was home to only three schools and harsh laws banning electricity, radios, eyeglasses and even umbrellas when he took power in 1970 coup. He died in January 2020. His successor, Sultan Haitham bin Tariq, has sought to shore up the sultanate’s finances while maintaining its positions as a key interlocutor between Iran and the West.

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  • It will take years for the oil and gas market to recover from the ‘mother of all shocks,’ Harvard economist says

    It will take years for the oil and gas market to recover from the ‘mother of all shocks,’ Harvard economist says

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    • Oil and gas prices have been affected by the “mother of all shocks,” a Harvard economist says.

    • Energy prices have seen wild swings since the pandemic, and the impact is still being felt.

    • “When there is an energy shock, it can take a huge price change to clear the market,” Kenneth Rogoff said.

    Oil and gas prices are stuck on a roller coaster caused by the “mother of all shocks,” as the supply-demand imbalance from the pandemic is still roiling energy markets, says Kenneth Rogoff, a top economist.

    The Harvard professor and former International Monetary Fund chief economist pointed to the wild ride that oil and gas prices have taken over the past few years, with energy prices plunging in the wake of the pandemic and skyrocketing when Russia began its full-scale invasion of Ukraine.

    Brent crude plunged as low as $14 a barrel in 2020 before soaring to a peak of $133 a barrel in June 2022. Similar swings were seen in US gas prices, which plunged to a low of $1.77 a gallon in 2020 before peaking around $5 a gallon in 2022, according to the Energy Information Administration.

    Energy prices have eased in recent months, with Brent trading around $80 a barrel and gas prices cooling to around $3 a gallon. That’s largely due to fears of a coming recession in the US and the potential impact on demand.

    But over the long term, oil and gas prices are expected to trend higher — and prices are set to continue to see big bouts of volatility as the unprecedented shock from the pandemic continues to roll through the market.

    “When there is an energy shock, it can take a huge price change to clear the market. And the pandemic was the mother of all shocks, bringing about the biggest sustained shift in demand since World War II,” Rogoff said.

    The world’s total oil demand was estimated to have risen 2.3 million barrels a day last year, according to the International Energy Agency. By 2050, demand could skyrocket as high as 42%, per an EIA estimate.

    More energy giants are investing to ramp up their crude-oil production, with the US seeing more than $100 billion of oil mega-mergers in 2023. But it could take years for those investments to fix the industry’s chronic undersupply problem, some experts have warned — which means prices are probably climbing higher for the time being.

    “In the longer term, energy prices look set to rise unless investment picks up sharply, which seems unlikely given current policy guidance. Supply and demand shocks will most likely continue to roil the energy market and the global economy,” Rogoff said.

    Higher crude demand has been a boon for US oil producers, with production reaching an all-time high in 2023 as firms raced to fill the world’s expanding appetite for crude oil. The US is estimated by the EIA to churn out an average of 13.2 million barrels a day in 2024 and 13.4 million a day in 2025, eyeing new records for at least the next two years.

    This story was originally published in January 2024.

    Read the original article on Business Insider

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  • Earth Day: How one grocery shopper takes steps to avoid ‘pointless plastic’

    Earth Day: How one grocery shopper takes steps to avoid ‘pointless plastic’

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    ALBANY, N.Y. — Nature wraps bananas and oranges in peels. But in some modern supermarkets, they’re bagged or wrapped in plastic too.

    For Judith Enck, that’s the epitome of pointless plastic. The baby food aisle is similarly distressing for her, with its rows and rows of blended fruits, vegetables and meat in single-use pouches that have replaced glass jars.

    Less than 10% of plastic is recycled. Most is buried, burned or dumped. Recycling rates for glass, aluminum and cardboard are far higher. And cardboard or paper packaging is biodegradable.

    The global theme for Earth Day on Monday is planet vs. plastic. Plastic production continues to ramp up globally and is projected to triple by 2050 if nothing changes. Most of it is made from fossil fuels and chemicals. As the world transitions away from using fossil fuels for electricity and transportation, plastics offer a lifeboat for oil and gas companies as a market that can grow.

    The Earth Day environmental movement is calling for “the end of plastics for the sake of human and planetary health.” People are increasingly breathing, eating and drinking tiny particles of plastic, though researchers say more work is necessary to determine its effect on human health. Millions of tons of plastic wind up in the ocean each year.

    This week, thousands of negotiators and observers representing most of the world’s nations are gathering in Ottawa to craft a treaty to try to end the rapidly escalating levels of plastic pollution.

    Plastic is everywhere in modern society. That’s evident whenever you go grocery shopping, said Enck, a former Environmental Protection Agency regional administrator who now heads up the advocacy group Beyond Plastics. There are things shoppers can do if they want to use less plastic.

    On a recent trip to the Honest Weight Food Co-op in Albany, Enck bought almond butter and yogurt in glass containers. She asked that her fish be wrapped in paper and not placed in a plastic bag. She steered clear of bagged carrots and breezed past the lettuce packed in what she calls “plastic coffins.”

    She keeps reusable shopping bags in her car, a common practice in New York since the state banned plastic carryout bags several years ago.

    “Even small steps make a difference because big supermarkets notice when people ask for less packaged material. Also, our kids pay attention. If they’re shopping with us and you talk about why you’re reaching for the glass jar rather than the plastic jar, it’s an opportunity for education,” she said.

    This interview has been edited for clarity and brevity.

    AP: How do you avoid plastic packaging and products at the grocery store?

    I tell everyone you’re not going to be perfect, but do the best you can and focus on things you buy most often. I just could not keep buying those plastic orange juice jugs. So what I did on the juice was, I bought a really nice glass pitcher with a lid on it. And for juices and lemonade, I only buy the frozen concentrate. You avoid the plastic altogether. It takes a little bit of time to melt it and add three cans of water. But most people can manage that.

    AP: Many shoppers start in the produce aisle. What are some tips?

    I bring reusable cloth produce bags because I don’t want to use those thin plastic bags. So if I need a couple of apples, a couple of avocados, I’ll put them right into my reusable produce bag. I try to buy loose carrots rather than carved carrots in little plastic bags. I will never, ever buy bananas if they’re in a plastic bag, which in my store they usually are not, but I have seen that sometimes. It’s pretty easy to buy loose peppers. I never put broccoli into a plastic bag. You know, you don’t need a lot of those produce bags.

    The real dilemma is the fresh berries. Now they do come in number two plastic, which is supposed to be recyclable. I know that Driscoll’s is starting to sell strawberries in a little cardboard box, which I am waiting for.

    AP: What do you do when plastic is unavoidable?

    For crackers, you can recycle the outside box if it’s cardboard, but then there’s usually a plastic bag inside or a waxy bag that you can’t recycle. But you can use that waxy bag or those little plastic bags if you have pets. I don’t have a pet, but my friends use bread bags and chip bags when they pick up pet poop. So why buy pet poop bags, you can just save those.

    I do use regular trash bags. I don’t knock myself out on that. I try not to fill it up. If you can reduce your waste generation, you’re not buying as many bags. I think it’s very important to compost at home if you have the space.

    AP: Where have you seen improvement?

    The household goods aisle. I am excited about the changes. For detergent you can get concentrates. I only use powder in the dishwasher. I strongly recommend that people avoid the plastic pods. And you can recycle the cardboard boxes from the powdered soaps. You don’t have to get it in plastic. I also think the beverage aisle has some real opportunities for recycling. Better than most other aisles.

    AP: What could be done so shoppers have more options?

    The nice thing about paper, cardboard, glass and metal is it can be easily made from recycled content. And it actually is recyclable. You can put it in your recycling bin. And if it gets littered, the paper in the cardboard, in particular, doesn’t stick around for centuries.

    If we were to pass a strong packaging law to reduce plastic packaging at the state or national level, you would have packaging engineers thinking about what happens after the packaging is used. New York is considering a law right now that would reduce plastic packaging. Unless we adopt new laws, it’s not going to change because the voluntary pledges by companies are falling short across the board. That’s the only way to solve this.

    ___

    McDermott reported from Providence, R.I.

    ___

    The Associated Press’ climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.

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  • Import prices climb 0.8% in January, up 0.7% minus fuel

    Import prices climb 0.8% in January, up 0.7% minus fuel

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    Story developing. Stay tuned for updates here.

    Master your money.

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  • Iran’s allies are attacking the West. What happens next?

    Iran’s allies are attacking the West. What happens next?

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    Could the U.S. take a tougher line?

    While the scale and target of Biden’s promised response is not yet clear, any unilateral move is likely to draw blowback from key allies in the Middle East who worry about sparking a regional war.

    Saudi Arabia has pushed for restraint in dealings with Tehran and fears the economic cost of regional instability.

    Turkey, a key NATO ally, has denounced Israel’s campaign in Gaza, while President Recep Tayyip Erdoğan has accused the U.K. and the U.S. of trying to turn the Red Sea into a “sea of blood.”

    “Turkey does not want to be drawn into this conflict because it shares a border with Iran,” said Selin Nasi, a visiting fellow at the European Institute of the London School of Economics. “If the U.S. as its main ally in NATO gets involved in this military conflict directly then Turkey has to choose a side, and that will mean it’s harder to maintain a balanced approach — like it has done with the war in Ukraine.”

    The challenge for Biden is how to retaliate without risking escalation by Iran and its partners in the region. Conversely, doing nothing — especially after having said he would avenge the deaths of the three U.S. soldiers — would leave him vulnerable to a charge of weakness from Trump.

    “Iran’s leadership probably calculates that the United States will be reticent to fulsomely respond in any manner that would risk escalation of tensions in the Middle East and spark the region-wide [conflict] the Biden administration has admirably tried to prevent the past three months,” said Jonathan Panikoff, a former U.S. deputy national intelligence officer.

    But the U.S. may have “to undertake a more fulsome response to restore deterrence,” he added.

    Jamie Dettmer, Jeremy Van der Haegen and Laura Kayali contributed reporting.



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    Gabriel Gavin

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  • Oil prices jump after drone attack kills U.S. troops, escalating Mideast crisis

    Oil prices jump after drone attack kills U.S. troops, escalating Mideast crisis

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    Oil futures popped higher Sunday evening, after a drone attack that killed three U.S. service members in northern Jordan, blamed by the White House on Iran-backed militants, marked a major escalation of tensions in the Middle East.

    West Texas Intermediate crude for March delivery
    CL00,
    +1.22%

    CL.1,
    +1.22%

    CLH24,
    +1.22%

    was up $1.09, or 1.4%, at $79.10 a barrel on the New York Mercantile Exchange. March Brent crude
    BRN00,
    +1.15%

    BRNH24,
    +1.14%
    ,
    the global benchmark, gained $1.11, or 1.3%, to trade at $84.66 a barrel on ICE Futures Europe.

    Much will ultimately depend on the U.S. response and whether Iran takes action aimed at shutting down the Strait of Hormuz, Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch on Sunday afternoon.

    “We are on the cusp of this escalating, which could seriously impact the flow of crude oil,” he said.

    Three U.S. service members were killed and more than two dozen injured in a drone strike on a U.S. base in northeast Jordan, according to U.S. Central Command. They were the first U.S. fatalities in months of attacks on U.S. bases by Iran-backed militias since the start of the Israel-Hamas war in October.

    President Joe Biden attributed the Sunday attack to an Iran-backed militia group and said the U.S. “will hold all those responsible to account at a time and in a manner (of) our choosing.” News reports said U.S. officials were still working to conclusively identify the precise group responsible for the attack, but have assessed that one of several Iranian-backed groups is to blame.

    Some congressional Republicans called for direct retaliation on Iran.

    “We must respond to these repeated attacks by Iran & its proxies by striking directly against Iranian targets & its leadership. The Biden administration’s responses thus far have only invited more attacks. It is time to act swiftly and decisively for the whole world to see,” wrote Sen. Roger Wicker of Mississippi, the senior Republican on the Senate Armed Services Committee, in a post on X.

    Oil futures rallied last week to their highest since November, but with gains attributed in part to production outages in the U.S. and more upbeat expectations around economic growth.

    “Crude already has the wind to its back, so this will only offer further upside,” Chris Weston, head of research at Australian brokerage Pepperstone told MarketWatch in an email.

    With the U.S. election later this year, “Biden needs to strike a balance between increasing aggression that potentially puts U.S. serviceman lives in danger and could potentially raise the cost of living…while also showing a defiant stance that shows his resolve against terror,” Weston said.

    Oil prices have seen short-lived rallies around developments in the Middle East since the start of the Israel-Hamas war, but have failed to build in a lasting geopolitical risk premium. West Texas Intermediate crude
    CL00,
    +1.22%

    CL.1,
    +1.22%
    ,
    the U.S. benchmark, remains around $15 below its 2023 peak in the mid-$90s set in late September. Brent crude
    BRN00,
    +1.15%
    ,
    the global benchmark, pushed back above $80 a barrel last week.

    Attacks by Iran-backed Houthi militants on Red Sea shipping have forced a rerouting of tankers and cargo ships. For crude, that’s had implications for the physical market but hasn’t interrupted the flow of crude from the Middle East.

    A move by Iran aimed at closing off the Strait of Hormuz, the world’s biggest oil-transportation chokepoint, remains a top worry.

    The strait is a narrow waterway that links the Persian Gulf with the Gulf of Oman and the Arabian Sea. At its narrowest point, the waterway is only 21 miles wide, and the width of the shipping lane in either direction is just two miles, separated by a two-mile buffer zone.


    Energy Information Administration

    Around 21 million barrels a day of crude moved through the waterway in the first half of 2023, equivalent to around a fifth of daily global consumption, according to the U.S. Energy Information Administration.

    The U.S. stock market has largely looked past Middle East tensions, with the S&P 500
    SPX
    returning to record territory this month, while the Dow Jones Industrial Average
    DJIA
    has also set a series of records.

    Dow futures
    YM00,
    -0.20%

    were off 94 points, or 0.3% as Asian trading got under way, while S&P 500 futures
    ES00,
    -0.22%

    fell 12 points, or 0.2%, and Nasdaq-100 futures
    NQ00,
    -0.24%

    lost 0.3%.

    Read: Stock-market rally faces Fed, tech earnings and jobs data in make-or-break week

    Away from oil, there were no signs of a significant surge in demand for instruments that traditionally serve as havens during periods of increased geopolitical tension. Futures on U.S. Treasurys
    TY00,
    +0.21%

    saw a modest rise of 0.2%, while the U.S. dollar
    DXY
    was little changed versus major rivals and gold futures
    GC00,
    +0.41%

    ticked up 0.4%.

    Escalating Middle East tensions won’t go unnoticed by traders, but probably doesn’t warrant a “solid derisking,” Weston said, particularly with investors facing a barrage of major market events in the week ahead.

    For U.S.-focused investors, the week ahead features a Federal Reserve policy meeting, earnings from tech industry heavyweights and a crucial December jobs report.

    The Middle East situation “won’t take us too far off the rates, growth track, but we have an eye on whether this escalates,” Weston said.

    —Associated Press contributed.



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  • Middle East braces for chaos as Iran and West square up

    Middle East braces for chaos as Iran and West square up

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    Press play to listen to this article

    Voiced by artificial intelligence.

    Western warplanes and guided missiles roared through the skies over Yemen in the early hours of Friday in a dramatic response to the worsening crisis engulfing the region, where the U.S. and its allies are facing a direct confrontation with Iranian-backed militants.

    The strikes against Houthi fighters are a response to weeks of fighting in the Red Sea, where the group has attempted to attack or hijack dozens of civilian cargo ships and tankers in what it calls retribution for Israel’s military offensive in Gaza. Washington launched the massive aerial bombardment of the group’s military stores and drone launch sites in partnership with British forces, and with the support of a growing coalition that includes Germany, the Netherlands, Australia, Canada, South Korea and Bahrain.

    Tensions between Tehran and the West have boiled over in the weeks since its ally, Hamas, launched its October 7 attack on Israel, while Hezbollah, the military group that controls much of southern Lebanon, has stepped up rocket launches across the border. Along with Hamas and Hezbollah, the Houthis form part of the Iranian-led ‘Axis of Resistance’ opposed to both the U.S. and Israel.

    Now, the prospect of a full-blown conflict in one of the most politically fragile and strategically important parts of the world is spooking security analysts and energy markets alike.

    Escalation fears

    Houthi leaders responded to the strikes, which saw American and British forces hit more than 60 targets in 16 locations, with characteristic bravado. They warned the U.S. and U.K. will “have to prepare to pay a heavy price and bear all the dire consequences” for what they called a “blatant aggression.”

    “We will confront America, kneel it down, and burn its battleships and all its bases and everyone who cooperates with it, no matter what the cost,” threatened Abdulsalam Jahaf, a member of the group’s security council.

    However, following the overnight operation, Camille Lons, a visiting fellow at the European Council on Foreign Relations, said there may now be “a period of calm because it may take Iran some time to replenish the Houthis stocks” before they are able to resume high-intensity attacks on Red Sea shipping. But, she cautioned, their motivation to continue to target shipping will likely be unaltered.

    The Western strikes are “unlikely to immediately halt Houthi aggression,” agreed Jonathan Panikoff, a former U.S. national intelligence officer for the Near East. “That will almost certainly mean having to continue to respond to Houthi strikes, and potentially with increasing aggression.”

    “The Houthis view themselves as having little to lose, emboldened militarily by Iranian provisions of support and confident the U.S. will not entertain a ground war,” he said.

    Iran also upped the ante earlier this week by boarding and commandeering a Greek-operated oil tanker that was loaded with Iraqi crude destined for Turkey, intercepting it as it transited the Strait of Hormuz. The vessel, the St. Nikolas, was previously apprehended for violating sanctions on Iranian oil and its cargo was confiscated and sold off by the U.S. Treasury Department. Its Greek captain and crew of 18 Filipino nationals are now in Iranian custody, with the incident marking a sharp escalation in the threats facing maritime traffic.

    Israeli connection

    Washington and London are striving to distinguish their bid to deter the Houthis in the Red Sea from the war in Gaza, fearful that merging the two will hand Tehran a propaganda advantage in the Middle East. The Houthis and Iran are keen to accomplish the reverse.

    The Houthi leadership claims its attacks on maritime traffic are aimed at pressuring Israel to halt its bombing of the Gaza Strip and it insists it is only targeting commercial vessels linked to Israel or destined to dock at the Israeli port of Eilat, a point contested by Western powers.

    “The Houthis claim that their attacks on military and civilian vessels are somehow tied to the ongoing conflict in Gaza — that is completely baseless and illegitimate. The Houthis also claim to be targeting specifically Israeli-owned ships or ships bound for Israel. That is simply not true, they are firing indiscriminately on vessels with global ties,” a senior U.S. official briefing reporters in Washington said Friday.

    Wider Near East crisis

    The Red Sea isn’t the only hotspot where American and European forces and their allies are facing off against Iran and its partners.

    In November, U.S. F-15 fighter jets hit a weapons storage facility in eastern Syria that the Pentagon says was used by the Iranian Islamic Revolutionary Guard Corps and the Shia militants it supports in the war-torn country. The response came after dozens of American troops were reportedly injured in attacks in Iraq and Syria linked back to Tehran.

    Israel’s war with Hamas has also risked spreading, after a blast killed one of the militant group’s commanders in the Lebanese capital, Beirut, earlier in January. Hezbollah vowed a swift response and tensions have soared along the border between the two countries, with Israeli civilians evacuated from their homes in towns and villages close to the frontier.

    All of that contributes to an increasingly volatile environment that has neighboring countries worried, said Christian Koch, director at the Saudi Arabia-based Gulf Research Center.

    “There’s a lot at stake at the moment and the Kingdom of Saudi Arabia and others are extremely worried about further escalation and then being subject to retaliation,” he said. “Now, the danger of regional escalation has been heightened further, which could mean that Iran will get further involved in the conflict, and this is a dangerous spiral downwards.”

    While long-planned efforts to normalize ties between the Saudis and Israel collapsed in the wake of the October 7 attack and the subsequent military response, Riyadh has pushed forward with a policy of de-escalation with the Houthis after a decade of violent conflict, and sought an almost unprecedented rapprochement with Iran.

    “Saudi Arabia has had one objective, which is to prevent this from escalating into a wider regional war,” said Tobias Borck, an expert on Middle East security at the Royal United Services Institute. “It has attempted over the last few years to bring its intervention in the war in Yemen to a close, including through negotiations with the Houthis and actually from all we know from the outside, [they] are reasonably close to an agreement.”

    The Western coalition is therefore a source of anxiety, rather than relief, for Gulf States.

    “Saudi Arabia and UAE are staying out of this coalition because mainly they don’t want to have the Houthis attack them as they had been for years and years with cruise missiles,” said retired U.S. General Mark Kimmitt, a former U.S. assistant secretary of state for political-military affairs. However, American or European boots on the ground are unlikely to be necessary, he added, because “our capabilities these days to find, fix and attack even mobile missile launchers is pretty well refined.”

    Far-reaching consequences

    At the intersection of Europe and Asia, the Red Sea is a vital thoroughfare for energy and international trade. Maritime traffic through the region has already dropped by 20 percent, Rear Admiral Emmanuel Slaars, the joint commander of French forces in the region, told reporters on Thursday.

    According to data published this week by the German IfW Kiel institute, global trade fell by 1.3 percent from November to December, with the Houthi attacks likely to have been a contributing factor. 

    The volume of containers in the Red Sea also plummeted and is currently almost 70 percent below usual, the institute said. In December, that caused freight costs and transportation time to rise and imports and exports from the EU to be “significantly lower” than in November.

    In one indication of the impact on industrial supply chains, U.S. electric vehicle maker Tesla said Friday it would shut its factory in Germany for two weeks.

    Around 12 percent of the world’s oil and 8 percent of its gas normally flow through the waterway, as well as hundreds of cargo ships. Oil prices climbed more than 2.5 percent following the strikes, fueling market concerns of the impact a wider conflict could have on oil supplies from the region, especially those being shipped through the Strait of Hormuz, linking the Persian Gulf with the Indian Ocean and the world’s most important oil chokepoint. 

    The Houthi attacks on the Red Sea, one of the world’s busiest waterways, have already caused major shipping companies, including oil giant BP, to halt shipments through the Red Sea, opting for a lengthy detour around the Cape of Good Hope instead. 

    According to Borck, the impact on energy prices has been limited so far but will depend on what happens next.

    “We need to look for two actors’ actions here. One is the Houthis, how they respond, and the other one is, of course, looking at how Iran responds,” he said. While Tehran has the “nuclear option” of closing the Strait of Hormuz altogether, it’s unlikely to do so at this stage. 

    “I don’t think the Strait of Hormuz is next. I think there would be quite a few steps on the escalation ladder first,” he added.  

    But Simone Tagliapietra, an energy expert at Brussels’ Bruegel think tank, warned that a growing confrontation with Iran could lead to tougher enforcement of sanctions on its oil exports. The West has turned a blind eye to Tehran’s increasing sales to China in the wake of the war in Ukraine, which has relieved some pressure on global energy markets. 

    A crackdown, he believes, “could see global oil prices rising substantially, pushing inflation higher and further complicating the efforts of central banks to bring it under control.”

    However, Saudi Arabia and the UAE could help compensate for such a move by ramping up their own production — provided they’re willing to risk the ire of Iran.

    Gabriel Gavin reported from Yerevan, Armenia. Antonia Zimmermann from Brussels and Jamie Dettmer from Tel-Aviv.

    Laura Kayali contributed reporting from Paris.

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    Gabriel Gavin, Antonia Zimmermann and Jamie Dettmer

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  • Why Red Sea chaos is driving oil buyers ‘into the arms of U.S. shale producers’

    Why Red Sea chaos is driving oil buyers ‘into the arms of U.S. shale producers’

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    Attacks by Iran-backed Houthi rebels on vessels in the Red Sea have led to transport disruptions for oil and other goods, but international oil shippers may have found a way to deal with the chaos.

    The latest data from the Energy Information Administration offers a hint to that solution.

    The report from the government agency showed surprisingly large weekly increases in gasoline and distillate supplies, contributing to losses for energy futures on Thursday.

    But Robert Yawger, executive director for energy futures at Mizuho Securities USA, also highlighted another key figure in the data — a weekly jump in U.S. petroleum exports.

    Exports climbed by 1.377 million barrels a day to 5.292 million barrels a day for the week ended Dec. 29, according to the EIA.

    “For the first time since Houthi Yemeni rebels started to attack international shipping in the Red Sea, we are seeing a spike in U.S. exports,” said Yawger, in a Thursday afternoon note.

    The Red Sea chokepoints are critical for international oil and natural-gas flows, according to the EIA.


    U.S. Energy Information Administration

    “Apparently, international shippers are worried about being attacked on the open sea, and are getting beat” on the cost of sailing around the Cape of Good Hope in South Africa as an alternative to the passage through the Red Sea, he said. Instead, the “safer and cheaper way to procure supply, especially for EU customers, is to sail the boat to the U.S. Gulf Coast and load up on cheap U.S. [oil] barrels.”

    See: Houthis launch sea drone to attack ships in Red Sea, hours after U.S. issues ‘final warning’

    U.S. benchmark West Texas Intermediate crude
    CL.1,
    +0.66%

    CLG24,
    +0.66%

    trades at a discount to global benchmark Brent crude
    BRN00,
    +0.45%

    BRNH24,
    +0.45%
    .
    On Thursday, the February WTI futures contract settled at $72.19 a barrel on the New York Mercantile Exchange, while March Brent settled at $77.59 on ICE Futures Europe — a difference of $5.40 a barrel.

    That compares with a “cost of carry” for an Amsterdam/Rotterdam/Antwerp refiner of around $4 a barrel, said Yawger. So “forget about the Houthis/Iranian menace in the Red Sea,” he said. “You don’t need a U.S. Navy escort from danger — just a nice, clean two- to- four-week round-trip journey to the U.S.”

    ‘Ironically, the chaos in the Middle East is driving international crude-oil customers into the arms of the U.S. shale producers.’


    — Robert Yawger, Mizuho

    He expects U.S. petroleum exports to sustain the 5 million plus barrel-per-day level in the coming weeks, with the “geopolitical situation seemingly heating up every day.”

    “Ironically, the chaos in the Middle East is driving international crude-oil customers into the arms of the U.S. shale producers,” said Yawger. “There is a very good chance U.S. exports break the all-time record in coming weeks, just in time for refiners to pull back on the run rate.”

    Weekly U.S. crude-oil exports reached a record 5.629 million barrels a day in the week ended Feb. 24, 2023, based on EIA data going back to February 1991.

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  • Shale Is Keeping the World Awash With Oil as Conflicts Abound

    Shale Is Keeping the World Awash With Oil as Conflicts Abound

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    Updated Jan. 1, 2024 12:05 am ET

    A surprise surge in American oil and gas production and exports is helping to keep the world stocked, blunting the impact of widening conflict in the Middle East that has crimped key shipping lanes. 

    When Iranian-backed Houthi militants began launching missiles and drones at ships crossing the Red Sea near Yemen in October, many feared disruption to the vital shipping lane would drive up energy prices. But oil and gas prices this past month have sunk about 5% and 23%, respectively. 

    Copyright ©2024 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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  • Oil prices end lower as crude suffers first losing year since 2020

    Oil prices end lower as crude suffers first losing year since 2020

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    Oil futures ended slightly lower Friday on the final trading day of 2023, capping crude’s first losing year since 2020 as concerns about the demand outlook outweighed potential supply disruptions and efforts by OPEC and its allies to limit production.

    Price action

    • West Texas Intermediate crude for February delivery
      CL00,
      -0.45%

      CL.1,
      -0.45%

      CLG24,
      -0.45%

      fell 12 cents, or 0.1%, to close at $71.65 a barrel on the New York Mercantile Exchange.

    • March Brent crude
      BRN00,
      +0.05%

      BRNH24,
      +0.05%
      ,
      the global benchmark, fell 11 cents, or 0.1%, to settle at $77.04 a barrel on ICE Futures Europe.

    • Back on Nymex, January gasoline
      RBF24
      rose 0.8% to $2.103 a gallon, while January heating oil
      HOF24
      fell 0.1% to $2.553 a gallon.

    • February natural gas
      NGG24,
      -0.64%

      declined 1.7% to finish at $2.514 per million British thermal units.

    Market drivers

    WTI, the U.S. benchmark, slumped 21.1% in the fourth quarter and suffered a yearly fall of 10.7%. Brent tumbled over 19% in the final three months of the year, posting an annual loss of 10.3%.

    Gasoline futures dropped 14.5% in 2023, while heating oil declined 24.1%. Natural gas plunged nearly 44%.

    Crude had rallied over the summer as the Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, maintained production cuts, with Saudi Arabia throwing in a voluntary reduction of 1 million barrels a day beginning in July and Russia moving to curb exports. While production cuts have been rolled over into early 2024, oil peaked in late September as expectations for a significant supply deficit failed to materialize.

    Increased production by the U.S., which saw its output hit record levels in 2023, and other non-OPEC producers have also capped the upside for crude, analysts said.

    Read: Why oil may not see a return to $100 a barrel in 2024

    Oil futures jumped in the wake of the outbreak of the Israel-Hamas war in October on fears that a broader conflict could cramp supplies from the Middle East, but crude failed to challenge its September highs and soon eroded its geopolitical-risk premium. Prices bounced somewhat in December as attacks by Yemen’s Iran-backed Houthi rebels on shipping vessels in the Red Sea sparked a round of rerouting, but gains have proven difficult to sustain.

    Instead, investors “have started to focus on the risk that there may be excessive supply in oil markets next year, and insufficient demand,” said Marios Hadjikyriacos, senior investment analyst at XM, in a note.

    “Even though OPEC+ has taken repeated steps to rein in production and support prices, it is unlikely to pursue the same strategy for much longer, as it would forfeit more market share to U.S. producers who have dialed up their own production to record levels,” he wrote.

    Natural-gas prices, meanwhile, have slumped recently on a warmer-than-normal winter, said Lu Ming Pang, senior analyst at Rystad Energy, in a Friday note.

    The number of heating-degree days (HDDs), which reflect the extent of heating required, has been below normal so far, with a deviation of 28 fewer HDDs from the normal reported on Dec. 15, the analyst noted. HDDs are forecast to rise through Jan. 5 but remain slightly below normal.

    “Gas demand for heating is likely to rise as a result but will still remain below seasonal norms,” Pang said. “A combination of warmer weather, high underground-storage levels, and high domestic gas production is expected to keep U.S. prices suppressed.”

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  • Oil prices post first weekly gain in 8 weeks amid ship attacks in Red Sea

    Oil prices post first weekly gain in 8 weeks amid ship attacks in Red Sea

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    Oil futures fell on Friday, but finished off the session’s lows to eke out a gain for the week — the first for U.S. and global benchmark crude prices in eight weeks.

    Attacks on ships traveling through the Red Sea, blamed on Yemen’s Houthi rebels, raised the potential for disruptions to the transport of oil and other goods, providing some support for prices.

    Oil saw larger declines early Friday after a Federal Reserve official walked back dovish comments made earlier this week by the Fed Chair Jerome Powell, helping to strengthen the U.S. dollar.

    Price action

    • West Texas Intermediate crude for January
      CL00,
      +0.49%

      CL.1,
      +0.49%

      CLF24,
      +0.49%

      declined by 15 cents, or 0.2%, to settle at $71.43 a barrel on the New York Mercantile Exchange, with prices ending 0.3% higher for the week, according to Dow Jones Market Data.

    • February Brent crude
      BRN00,
      +0.52%

      BRNG24,
      +0.52%
      ,
      the global benchmark, fell 6 cents, or nearly 0.1%, to $76.55 a barrel on ICE Futures Europe, settling 0.9% higher for the week.

    • January gasoline
      RBF24,
      -0.16%

      added 0.9% to $2.14 a gallon, up almost 4.3% for the week, while January heating oil
      HOF24,
      +0.20%

      climbed 1.1% to $2.62 a gallon on Nymex, marking a weekly rise of 1.5%.

    • Natural gas for January delivery
      NGF24,
      -0.88%

      gained 4.1% to $2.49 per million British thermal units, but still logged a weekly loss of 3.5%.

    Price support

    Danish shipping company A.P. Moeller-Maersk
    MAERSK.A,
    +7.52%

    said it will pause all of its container shipments through the Red Sea until further notice and detour them around Africa, Reuters and Bloomberg reported Friday, amid rising risks to its fleet posed by Houthi militants.

    The Red Sea is “one of the hot pockets of seaborne crude flows,” accounting for approximately 10% of global volume, said Manish Raj, managing director at Velandera Energy Partners. “Although the attackers lack sophistication … shipping crews are even less sophisticated, making them easy targets.” 

    A potential blockage of the Red Sea route would be “chaotic indeed, but not nearly as detrimental as blockage of [the] Strait of Hormuz near Iran, for which there is no viable alternative,” Raj said.

    Read from the AP: How are Houthi attacks on ships in the Red Sea affecting global trade?

    For now, there is concern over higher insurance costs for these ships, said Phil Flynn, senior market analyst at the Price Futures Group.

    With ships in the Red Sea continuing to be at high risk, ‘it won’t take that much for the market’ to see oil prices spike if an oil tanker should be hit.


    — Phil Flynn, Price Futures Group

    Obviously, the risk to oil supply is large, although “so far, most of the attacks have been on cargo ships and not oil-related ships,” Flynn told MarketWatch.

    However, as ships in the Red Sea continue to be at high risk, “it won’t take that much for the market” to see oil prices spike if an oil tanker is hit, Flynn said.

    For the week, both U.S. and global benchmark crude prices posted gains.

    “The combination of lower U.S. inventories, stronger economic data, and improved OPEC compliance [with production cuts] for the month of November were the highlights of the week,” said Peter McNally, global head of sector analysts at Third Bridge.

    “However, there are ongoing seasonal challenges that forced OPEC to sustain production cuts through the first quarter of 2024, so it remains to be seen if they have done enough to prevent inventories from continuing their upward trend,” he said.

    Read The Year Ahead: Why oil may not see a return $100 a barrel in 2024

    Price pressures

    Oil had been trading lower early Friday after New York Federal Reserve President John Williams told CNBC that it is “premature” to discuss whether it is time to cut interest rates. “We aren’t really talking about cutting interest rates right now,” Williams said.

    That ran contrary to Powell’s comments Wednesday that Fed officials were starting to discuss when to cut rates.

    After the euphoria in the U.S. stock market over the Powell “pivot party” on Wednesday, we got a “wake-up call” from Williams when he pushed back on market expectations for a March rate cut, Michael Hewson, chief market analyst at CMC Markets UK, said in market commentary.

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  • Oil prices drop to 2-week lows as doubts linger over OPEC+ production cuts

    Oil prices drop to 2-week lows as doubts linger over OPEC+ production cuts

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    Oil futures fell Monday to their lowest levels in more than two weeks, building on recent declines that came after a round of voluntary production cuts announced by OPEC+ left traders skeptical about compliance.

    Price action

    • West Texas Intermediate crude for January delivery
      CL00,
      -0.63%

      CL.1,
      -0.63%

      CLF24,
      -0.63%

      fell 85 cents, or 1.2%, to $73.22 a barrel on the New York Mercantile Exchange,

    • February Brent crude
      BRN00,
      -0.44%

      BRNG24,
      -0.44%

      dropped $1.29, or 1.6%, $77.59 a barrel on ICE Futures Europe.

    • January gasoline was down 0.1% at $2.1198 a gallon, while January heating oil
      HOF24,
      +0.85%

      edge down 0.4% to $2.6501 a gallon.

    • January natural gas
      NGF24,
      -4.48%

      declined 5.3% to $2.664 per million British thermal units.

    Market drivers

    The OPEC+ deal last week was “unconvincing, to say the least, and oil prices have been in decline ever since,” said Craig Erlam, senior market analyst at OANDA.

    “With markets seemingly anticipating more of an economic slowdown next year, the announcement simply doesn’t go far enough,” he said in market commentary. “It’s another large cut but how much will actually be delivered on? And are we at the limits of what the alliance is willing to achieve to balance the markets?”

    Crude prices ended last week with back-to-back losses after OPEC+ producers on Thursday agreed to voluntarily cut around 2.2 million barrels a day (mbd) of crude from the market in the first quarter of next year, a figure that included a widely expected extension of Saudi Arabia’s 1 mbd voluntary output cut and Russia’s 300,000 barrel a day cut to crude exports.

    OPEC+ cuts “look like they have rebalanced the market” for the first quarter of next year, but without further OPEC+ cuts in supply from the second quarter, “oil looks to register a 1 mbd surplus in that quarter, analysts at Citi wrote in a note dated Monday.

    The voluntary nature of the overall reductions sparked skepticism around enforcement and compliance, analysts said.

    “Soft price action since the OPEC+ meeting is reflective of an investor cohort that remains perplexed on how to deploy risk. The near-term path of least resistance is lower, given the degree of ambiguity and lack of catalysts,” Michael Tran, commodity and digital intelligence strategist at RBC Capital Markets, said in a Sunday note.

    “Oil has become a ‘show me’ type market. Now here comes the hard part: Prices will likely remain volatile and potentially directionless until the market sees clear data points pertaining to the voluntary output cuts,” he said.

    Those cuts won’t be implemented until next month, with country-level production and export data to follow. That means it will be a “long and volatile” two months before there is even preliminary clarity on compliance — “a long stretch for a market that is seeing a high degree of uncertainty, lack of risk deployment and a liquidity vacuum,” Tran wrote.

    Traders were also monitoring developments in the Middle East following an escalation of maritime attacks related to the Israel-Hamas war.

    Ballistic missiles fired by Yemen’s Houthi rebels hit three commercial ships Sunday in the Red Sea, while a U.S. warship shot down three drones in self-defense during the hourslong assault, according to the U.S. military. The Iranian-backed Houthis claimed two of the attacks.

    Oil futures spiked higher following the Hamas attack on southern Israel on Oct. 7 but failed to challenge their late September highs. Crude subsequently fell back as fears of a broader conflict that could threaten crude flows faded, trading well below levels seen just before the start of the conflict.

    — Associated Press contributed.

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