U.S. Forecasts and Chinese Tariffs | Weekly News Update

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U.S. Forecasts 50 Percent Cut in Iran Oil Sales

In early November, the US will apply energy sanctions on Iran as a result of the US pulling out of the Iran nuclear agreement.  The Trump administration forecasts that countries will be persuaded to cut Iranian oil imports by 700,000 to 1 million barrels per day (mmbd).  This is short from the original goal to halt one hundred percent of crude sales out of Iran.  Last year, Iran exported 2.1 mmbd.  Iran is already feeling the pressure as the state-owned National Iranian Oil Co. reduced prices to the lowest levels in fourteen years.  Despite the pressure of the sanctions, multiple countries have announced they will not be cutting Iranian oil.  China, who accounts for approximately 50 percent of Iran’s oil exports, said they will not cut Iranian oil.  Another challenge is the European Union (EU) countries, which account for twenty percent of Iranian oil exports.  Multiple EU nations vowed to continue participation in the nuclear accord and import oil from Iran.  It remains uncertain whether the European oil companies will stand with their governments or cut Iranian oil to avoid US sanctions.

On the other hand, the US is selling more oil to India as the countries signed a short-term contract to continue their business relationship from November to January.  India is Iran’s largest customer of crude oil.  This is the first step in allowing US oil companies to make long-term deals with Asian markets, which is mainly dominated by Middle Eastern suppliers.  This will also help India when there are supply disruptions in these Middle Eastern nations, like the sanctions on Iran.  Currently, the state-owned Indian Oil company plans to continue buying oil from Iran until the government decides otherwise.

China’s Tariff Turnaround: U.S. Crude Removed

China imposed 25 percent tariffs on $16 billion worth of US imports.  However, crude oil, which was a commodity originally on the list, did not make the final cut.  In the past two years China has been the largest buyer of US crude oil as they imported nearly 20 percent of total US exports.  China depends on imports for 70 percent of its energy needs, while this value is expected to increase to 80 percent by 2040.  President Xi is attempting to reverse this trend by expanding domestic oil and gas exploration.  This is an attempt to boost China’s energy security and be less dependent on other countries like the US, Saudi Arabia, and Russia.

In Other News

8/6

Bloomberg: Power Worth Less Than Zero Spreads as Green Energy Floods the Grid

With wind and solar farms sprouting up in more areas — and their power getting priority to feed into the grid in many places — the amount of electricity being generated is outstripping demand during certain hours of the day.

Transport Topics: Country’s Top Truckers to Headline ‘Super Bowl of Safety’ Aug. 15-18

In less than two weeks, the trucking world will turn its focus on the 81st annual National Truck Driving Championships, where the country’s next premier commercial driver will be crowned.

WSJ: Saudi Arabia’s Spat With Canada Risks Backlash From Investors

Saudi Arabia on Monday declared Canada’s ambassador persona non grata, and gave him 24 hours to leave the country. The decision to expel the Canadian ambassador came after Canada’s Foreign Ministry criticized Saudi Arabia for arresting human-rights activists.  The kingdom has taken several other measures including declaring that it will put all business dealings with Canada on hold.

Transport Topics: Oil Industry Starts Eradicating Ship Fuel Supply Ahead of IMO Mandate

Oil refineries are starting to eradicate stockpiles of sulfur-rich fuel that powers the merchant fleet in anticipation of a demand collapse in fewer than 18 months.

Bloomberg: Saudi Arabia Crude Flows to U.S. Swell as Venezuela Output Falls

Saudi Arabia is sending the most crude oil to the U.S. in 15 months.  The world’s largest oil exporter loaded 1 million barrels a day onto tankers bound for the U.S. in July. That’s a 36 percent jump from June and the single biggest monthly flow to the U.S. since April 2017.

Reuters: New wave of mega LNG projects is approaching

A new race to build multi-billion dollar liquefied natural gas (LNG) plants is gaining momentum after a long hiatus in investments as energy giants sense a widening supply gap within five years.

8/7

World Oil: California Returns Fire at Trump’s Call to Rescind its Authority

The state plans to force carmakers to continue complying with Sacramento’s rules, even if Trump weakens those set in Washington. This decoupling, set forth in a regulatory filing to be released Tuesday, is California’s biggest salvo in the escalating fight over Trump’s fuel-economy and tailpipe emission plans. It could spark years of litigation and create a patchwork of standards that vary from state to state.

WSJ: Oil Rises as Trump Issues ‘Biting’ Sanctions on Iran

Oil prices rose 0.7 percent on Tuesday as sanctions against Iran went into effect on Monday midnight. Moreover, Trump’s latest activity on the social media platform Twitter signals that US government will not issue any waivers that would allow some countries to buy Iran’s oil. This will likely result in further upward pressure on Crude prices as we are getting closer to November 4th, which is when sanctions on Iran’s oil will take effect.

Transport Topics: EPA to Study Financial Implications of Maritime Emissions Rules

The U.S. Environmental Protection Agency has launched a study of the potential economic impact forthcoming regulations that require shipping vessels to burn cleaner fuel might have on other transportation sectors, including trucking.

Journal of Commerce: Uber Upgrades Freight Business, Plans Major Investment

Uber Freight could lead to expanded opportunities for shippers to plug into the platform to not just find capacity but manage freight lanes. The “driver-centric” business has been working to broaden the services and tools it provides freight shippers.  Also see, Uber Doubles Down on Freight Business

8/8

Reuters: China State Firms to Expand Domestic Oil, Gas Exploration After Xi’s Call

China’s state energy giants pledged this week to expand domestic oil and gas exploration and production and increase natural gas supplies following an instruction from President Xi Jinping to boost national energy security.

Trucks.com: Nikola Raises $100 million in Week One of $200-Million Funding Round

Fuel cell truck developer Nikola Motor Co. said it had raised half its $200-million goal in its third round of funding and expects the effort to be over-subscribed.  The company plans a public unveiling of its first production truck early next year.  Nikola has shown prototypes of two Class 8 models. Its business plan calls for it to lease the tractors in a package that includes access to a Nikola-built network of hydrogen fueling stations.  Also see, Nikola Motors raises $100 million

NGT News: EV Policy Actions Are Happening All Across the Country

During the second quarter, 36 states and the District of Columbia took actions related to electric vehicles (EVs) and charging infrastructure.  NCCETC has released its Q2 2018 edition of “The 50 States of Electric Vehicles”, which provides insights on state regulatory and legislative discussions and actions on EVs and charging infrastructure.

8/9

WSJ: China’s Tariff Turnaround: U.S. Crude Oil Drops Off the Target List

As China made good on its threat to impose 25% tariffs on $16 billion worth of U.S. imports, one big-ticket item originally on its hit list was conspicuously missing: crude oil.  Over the past two years China has become the biggest buyer of U.S. crude-oil exports, last year taking a fifth of the total.

Bloomberg: U.S. Forecasts 50% Cut in Iran Oil Sales, Missing Goal

The Trump administration forecasts that it will persuade countries to cut Iranian oil imports by as much as 1 million barrels a day when it reimposes energy sanctions in early November.

8/10

World Oil: U.S. selling more oil to India, Iran’s biggest customer

One of Iran’s biggest oil customers is buying more U.S. crude as President Donald Trump sticks to his pledge to squeeze the Persian Gulf nation’s energy trade. State-run refiner Indian Oil Corp., which had been buying U.S. crude in the spot market, signed a term tender to purchase American oil for delivery every month between November and January.

WSJ: Russia Boosts Global Oil Supply

The world’s oil supply expanded in July on the back of surging Russian crude production, in a concrete sign of the unraveling of a nearly two-year-old OPEC-led agreement to curb output.  Russian crude and condensate production climbed by 150,000 barrels a day last month, to 11.21 million barrels a day.

This weekly publication is designed to highlight relevant industry news to provide professionals in the transportation, supply chain, and energy sectors with up-to-date information in a rapidly changing marketplace. This update is purely a compilation of industry news and as such, does not necessarily reflect the opinion of Breakthrough. We do not warrant or guarantee accuracy or completeness of information. For additional information, please contact us at info@breakthroughfuel.com.

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