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March 9th - The de facto closure of the Strait of Hormuz has disrupted shipping, forcing Saudi Arabia to divert its crude oil shipments to the Red Sea. Saudi Aramco recently launched a rare tender to supply approximately 4.6 million barrels of crude oil for immediate delivery, encompassing ultra-light, heavy, and its flagship Arab Light grade. This tender in the spot market reflects the pressure it faces. Because it typically sells only through long-term contracts, Saudi Aramco is unable to sell most of its oil through conventional channels and is instead transporting a record volume of crude to Yanbu port on the Red Sea via pipeline. Bloomberg vessel tracking data shows that its western terminal shipments have surged to approximately 2.3 million barrels per day this month, about 50% higher than any month since the end of 2016. Traders say the prices in these tenders represent a premium over the official selling prices for their respective grades in March. These official prices were set a month ago, well before the current Middle East conflict began.March 9th - According to foreign media reports, Saudi Aramco has provided spot crude oil supplies through a series of rare tenders due to the de facto closure of the Strait of Hormuz forcing cargoes to be diverted via the Red Sea. According to informed traders, the company recently offered approximately 4.6 million barrels of crude oil across three grades – Arab Extra Light, Arab Heavy, and Arab Light.Market news: Saudi Aramco has provided immediate crude oil supplies through a series of rare tenders.March 9th - As the escalating conflict in the Middle East pushes up global oil prices, the South Korean government has taken emergency measures. South Korean President Lee Jae-myung, at an emergency economic meeting on Monday, called for the "swift introduction and bold implementation of a maximum oil price system" to curb excessive price increases. Lee made these remarks as international oil prices approached $120 per barrel, a new high since 2022. Production cuts by Middle Eastern oil-producing countries, the continued blockade of the Strait of Hormuz, and the USs threats to escalate the conflict have put continuous pressure on the energy market. South Korea relies almost entirely on energy imports, with approximately 70% of its oil transported through the Strait of Hormuz. This proposed oil price cap mechanism would be the first time South Korea has used such measures in nearly 30 years, aiming to mitigate the impact of geopolitical instability on its domestic energy supply chain.March 9th - According to the Financial Times, G7 finance ministers will hold an emergency meeting on Monday to discuss the possibility of jointly releasing emergency oil reserves under the coordination of the International Energy Agency (IEA). This meeting aims to address the surge in oil prices following the conflict in the Gulf region. Sources familiar with the matter revealed that the G7 finance ministers and IEA Executive Director Fatih Birol will hold a teleconference at 8:30 AM New York time (8:30 PM Beijing time) to discuss the impact of the war with Iran. Sources also indicated that three G7 countries, including the United States, have so far expressed support for the idea. The 32 member countries of the IEA hold strategic reserves as part of a collective emergency system established to address the oil price crisis. One source stated that some US officials believe a joint release of 300 to 400 million barrels of oil reserves would be appropriate, equivalent to 25% to 30% of the total reserves of 1.2 billion barrels.

Ukraine Will Block A Crucial Russian Gas Transit to Europe, Blaming Russia

Charlie Brooks

May 11, 2022 09:46

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Ukraine said on Tuesday that it will cease the flow of gas via a transit point that, according to Kiev, sends over one-third of the fuel piped from Russia to Europe through Ukraine. Kiev blamed Moscow for the action and said it would redirect the flows elsewhere.


Even after Moscow's invasion, Ukraine has remained a significant transit route for Russian gas to Europe.


The operator of Ukraine's gas infrastructure, GTSOU, has declared "force majeure" and will cease shipments through the Sokhranivka route as of Wednesday. "Force majeure" is a provision triggered when a firm is affected by circumstances beyond its control.


However, Gazprom (MCX:GAZP), which has a monopoly on Russian gas pipeline exports, said that it was "technologically impossible" to move all volumes to the Sudzha connecting point farther to the west, as GTSOU requested.


GTSOU CEO Sergiy Makogon told Reuters that Russian occupation troops have begun transporting gas flowing through Ukraine to two rebel territories supported by Russia in the country's east. He failed to provide proof.


The company stated that it was unable to operate at the Novopskov gas compressor station due to "the interference of the occupying forces in technical processes," adding that it could temporarily redirect the affected flow to the Sudzha physical interconnection point, which is located on Ukrainian territory.


Ukraine's suspension of Russian natural gas shipments via the Sokhranivka route should have no effect on the local Ukrainian market, according to Yuriy Vitrenko, the president of the state-owned energy business Naftogaz.


The national gas company of Moldova, a tiny country on Ukraine's western border, said that neither GTSOU nor Gazprom had notified them of a supply interruption.


Russian army and separatist militants have controlled the Novopskov compressor station in the Luhansk area of eastern Ukraine since shortly after Moscow launched a "special military operation" in February.


GTSOU said that it is the first compressor in the Ukraine gas transit system in the Luhansk area, the transit route for about 32,6 million cubic metres of gas per day, or a third of the Russian gas transported to Europe through Ukraine.


To fulfill its "transit responsibilities to European partners in full," GTSOU said that it will "temporarily move unavailable capacity" to the Sudzha interconnection point.


Gazprom said it had received information from Ukraine that the nation will cease gas transit to Europe through the Sokhranivka interconnector at 7:00 a.m. on Wednesday local time.


The Russian corporation said that it observed no evidence of force majeure or impediments to business as usual. Gazprom emphasized that it was fulfilling its commitments to European gas purchasers.


As punishment for the invasion of Ukraine, the United States has pushed other nations to reduce their reliance on Russian energy and has prohibited Russian oil and other energy imports.


Ned Price, a spokeswoman for the U.S. State Department, said that Tuesday's declaration does not alter the "as soon as feasible" schedule for reducing global dependency on Russian oil.

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