Iran Sanctions Effect on Global Crude Oil
US sanctions on Iran go into effect on November 5th. Leading up to the sanctions, crude producers ramped up production to balance out the lost supply from Iran. The US passed Russia to be the largest oil producer in the world briefly. US output reached 11.346 million barrels per day (mmbd), whereas Russia pumped 11.21 mmbd in August. In September, Russia regained control as the top oil producer by raising their output to 11.37 mmbd and increased to 11.412 mmbd in October which is a post-Soviet record and not far off the highest ever output. Members of the Organization of Petroleum Exporting Countries (OPEC) – such as Saudi Arabia, Iraq, and Libya – helped OPEC increase production to its highest level since before the group agreed to cut crude output in 2016. The cartel’s production increased 0.43 mmbd in October.
On the other side, top customers of Iranian crude asked the US for waivers to continue to buy crude from Iran. Eight countries – including Japan, India, and South Korea – were granted waivers. The waivers were accepted to prevent oil prices from jumping up. However, the waivers are only temporary, and the Trump administration expects the countries to continue to cut Iranian crude in the coming months. Several countries were not granted waivers but were not announced. China and Turkey are among countries that are resisting the sanctions and plan to continue to buy crude from Iran.
Transportation and Energy in the Mid-Term Elections
On Tuesday November 6, voters will go to the polls for the mid-term elections. With the elections, Transportation and Energy are amongst the many industries that are affected by the results. Some states included legislation on the ballots and others have plans to implement legislation depending on which candidate is elected. California could potentially repeal the 20¢ per gallon diesel tax that went into effect November 2017. Colorado may ban fracking on 85% of the state’s non-federal land. Carbon is also a big topic as Washington may implement a carbon fee based on sales and consumption and Virginia is planning to revise a cap-and-trade carbon regulation. Another big topic not on the ballot is a federal infrastructure plan. Both Republicans and Democrats want a plan, but how it is framed up will be determined by elected officials.
In Other News
A port being developed in the southern Iranian city of Chabahar underscores some of the dilemmas U.S. policy makers face in implementing sanctions against Tehran.
After one month of testing precision scheduled railroading, Union Pacific expects the new model could bring at least $500 million in productivity gains in 2019, executives said during an earnings call.
Tesla plans to start delivering its all-electric trucks by 2020, a major third-party logistics provider says. Other major truck OEMs such as Daimler and Volvo will start delivering their electric models as early as next year.
Representatives from UPS Inc. and Walmart Inc., two of the country’s largest fleets, said electric vehicles can provide environmental, economic and community benefits, which make efforts to work through challenges surrounding duty cycle, charging infrastructure and cost worthwhile.
Democrats are planning to pursue a major U.S. transportation and infrastructure measure if they retake control of the U.S. House in the Nov. 6 midterm elections, but the same question that helped stall Donald Trump’s trillion-dollar initiative remains: How would it be funded? Also see, Infrastructure Boom Seen Roaring Ahead Regardless of Midterm Results
A Virginia state board voted Monday to advance the Department of Environmental Quality’s (DEQ) revised carbon market regulation, an official said, marking an interim step towards approving the program that would link with RGGI and begin in 2020.
In comments to the proposed federal rulemaking on new fuel economy and greenhouse-gas emissions standards, General Motors is suggesting the establishment of a national zero-emissions vehicle (NZEV) program.
The International Maritime Organization (IMO) has adopted the “carriage ban” rule, which will make it an offense as of March 1, 2020, for ships to carry fuel that contains sulfur content higher than 0.5 percent, unless the ship has a scrubber.
This November in Washington State, climate change is on the ballot. If it passes, Initiative 1631 would create the first carbon emissions fees in the U.S. and potentially kickstart a national movement to staunch greenhouse gases. Also see, Will One State Go It Alone to Make Polluters Pay?
With just days to go before renewed sanctions take effect Nov. 5, the reality is setting in: three of Iran’s top five customers – India, China, and Turkey – are resisting Washington’s call to end purchases outright, arguing there are not sufficient supplies worldwide to replace them.
Canadian National is doubling down on its intermodal and refrigerated business with the acquisition of Winnipeg-based carrier Trans X Ltd. One of Canada’s largest and oldest carriers, Trans X’s business lines span truckload, LTL, intermodal, warehousing and freight forwarding.
A new multiagency operation aimed at developing a system to test connected and automated vehicles will be led by the Illinois Department of Transportation, the state’s governor announced recently.
As midterm elections draw near, voters in several states will face ballot questions related to transportation revenue at the polls Nov. 6. States rely on a variety of mechanisms, including fuel taxes, vehicle registration fees, tolls, sales taxes and miles-based user fees, to generate transportation revenue.
A growing array of seaport and trade figures suggest U.S. companies pulled forward their orders for goods from China to get ahead of new tariffs, and shipping and logistics businesses now are bracing for a similar surge before additional tariffs could be rolled out at the start of next year.
The American Trucking Association and its research arm, the American Transportation Research Institute have suggested the inaction on infrastructure funding touches fleets’ biggest pain points: driver recruiting and retention, climbing operational costs, and general service and performance. The ATA recently touted its Build America Fund Plan (first revealed in early 2018), which would add 20 cents per gallon of diesel over a four-year period. The additional fuel tax would be imposed at the terminal rack. Also see, Transportation Candidates Tout Infrastructure Bona Fides in Midterm Bids.
For its size and measure, the U.S. freight industry did take quite a while to accommodate technological interventions into its workflow. Optimal Dynamics, a startup based out of New York, is looking to help large fleets by automating the process of finding the right loads for their trucks, through AI and machine learning analytics.
The U.S. surpassed Russia in August to claim the title of world’s top oil producer, with the largest year-on-year output increase in its history. Output rose to a record 11.346 million barrels a day, according to a monthly report issued Wednesday by the U.S. Energy Information Administration. Russia pumped 11.21 million in August, according to its energy ministry.
Maersk Line took a step closer towards its ambitious goal of becoming an integrator of global container logistics with the launch of an instant booking confirmation tool. Shippers will be able to complete their bookings and receive confirmation within seconds compared with previous waiting times of two hours.
OPEC’s crude production climbed to the highest level since 2016 as increases by Saudi Arabia and Libya offset losses stemming from impending U.S. sanctions on Iran. The group’s 15 members boosted output by 430,000 bpd to 33.33 million barrels per day in October.
With 2018 being described as one of the strongest years in history for trucking companies, earnings reports from large publicly traded carriers continue to show zooming revenue and profits.
Jolted by fresh allegations of Iranian plots on their doorsteps, European governments are discussing their first targeted sanctions against Tehran in years as they strain to uphold the 2015 Iran nuclear deal.
When you look at the bigger picture of the US trucking industry’s demographics, we don’t hesitate to argue that in the aggregate, a driver shortage doesn’t exist. Overall driver count is at an all-time record high, and the count continues to expand monthly.
The U.S. has agreed to let eight countries — including Japan, India and South Korea — keep buying Iranian oil after it reimposes sanctions on the OPEC producer on Nov. 5, a senior administration official said.
Russian oil production moved closer to an all-time high before the nation meets with OPEC partners to discuss future supply. The country’s crude and condensate output averaged 11.412 million b/d last month, according to data from the Energy Ministry’s CDU-TEK unit released today. Also see, Russian Oil Output Nears All-Time High.