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Last Updated: January 10, 2020
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Headline crude prices for the week beginning 6 January 2020 – Brent: US$70/b; WTI: US$64/b

  • As tensions in the Middle East spill over into violent escalation, crude oil prices spiked as the US initiated the assassination of one of Iran’s most powerful general, incurring the wrath of both Iran and Iraq, where the fateful drone strike took place
  • The death of Qaseem Soleimani was called a ‘major strike against Iran’ and ‘bigger than (the death of) bin Laden’; Iran has vowed revenge and withdrew from its nuclear deal commitments, while Iraq has voted to expel all American military in retaliation
  • In response, Iran initiated missile strikes against US military bases in northern Iraq – and may have downed an Ukrainian commercial plane in the process – but both the US and Iran have walked back from the brink, providing some calm to the market
  • However, tensions will still be high and any spark could result in all-out war, which may not just affect Iran but also Iraq and its output of some 4 mmb/d; Chevron has already evacuated its workers from the Kurdistan Region of Iraq, which is near the strike zones targeted by Iran
  • The US active rig count fell below 800 sites once again, wiping out two weeks of gains, with the loss of 9 rigs (7 oil, 2 gas) that coincided with a period of weakness in US oil prices
  • After the volley of attacks that drove prices higher, the risk of imminent war between the US and Iran has receded (slightly), causing crude prices to fall back as well; global crude benchmarks have now returned to their previous ranges, with Brent at US$64-66/b and WTI at US$59-61/b

Headlines of the week


  • The first three crude oil cargoes from Guyana have been snapped up by Shell, which won the rights to market the Liza crude cargoes through a government auction, with the first cargo expected to be lifted in February
  • While ExxonMobil and Hess reap the rewards from Guyana, others exploring in the area have not been so lucky; Tullow Oil and Repsol announced that they would plug and abandon the Carapa-1 well in the Kanuku license after encountering less crude oil flow than expected
  • ExxonMobil has secured a significant amount of new acreage in Egypt, with over 1.7 million offshore acres acquired, including the 1.2 million-acre North Marakia block in the Herodotus Basin and the North East El Amriya block in the Nile Delta; ExxonMobil will hold 100% interest in both blocks
  • The latest UK offshore licensing round attracted 104 applications for 245 blocks or part-blocks from 71 companies, focusing on acreage near and around the main producing areas of the UK Continental Shelf
  • Petronas continues to dip its toes into South America, acquiring 50% of the Tartaruga Verde producing field and Module III of the Espadarte field from Petrobras, to go along with the 3 Brazilian exploration blocks it won recently
  • Chevron and PDVSA’s joint venture Petropiar facility will once again produce Hamaca-grade synthetic crude for export after the crude upgrader site was forced to switch to blending heavier Merey crude since July 2019
  • Iraq has resumed production at the Nasiriya oil field after output was halted by domestic protests over government corruption, although operations at the Nasiriya oil refinery remained curtailed after protestors blocked plant access


  • The government of Curacao has ended its contract with PDVSA to operate the 335,000 b/d Isla refinery at the end of 2019, despite both parties reaching an earlier deal to extend PDVSA’s operatorship by a year
  • After six months of trial runs, Hengyi Petrochemicals’ 160,000 b/d Pulau Muara Besar refinery in Brunei has reached full commercial production, running at near 100% utilisation rates, with much of its LPG exported to the Philippines, gasoline to Indonesia and other fuels, that will add an additional 5.7 bcm of gas and 700,000 tons of condensate ad across the region
  • Zhejiang Petroleum & Chemical has started up the remaining units at its Zhoushan refinery, which began initial production in May 2019, which will double crude processing capacity to 400,000 b/d and add a 1 mtpa ethylene unit
  • China Sinochem expects to start up a new 60,000 b/d crude processing unit at its Quanzhou refinery in Fujian in mid-2020, alongside a new petrochemicals plant fed by a naphtha cracker with capacity for 1 million tpa of ethylene

Natural Gas/LNG

  • Natural gas has begun to flow from the Leviathan field in Israel, some 10 years after the field was discovered and 3 years after development was sanctioned; Leviathan will be producing at some 1.2 bcf/d during its first project phase
  • The leaders of Cyprus, Greece and Israel have officially signed the accord to begin work on the Eastern Mediterranean gas pipeline, with the 1900 km link connecting gas fields in the East Mediterranean to Europe through Greece
  • Novatek has brought first gas online from its North Russkoye field in West Siberia’s Yamal-Nenet that will yield an additional 5.7 bcm of gas and 700,000 tons of condensate, as the first launch of the North Russkiy block of fields – which include the Dorogovskoye, East Tazovskoye and Kharbeyskoye fields

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Where to buy your Gun Parts from?

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May, 20 2022
High Oil Prices and Indonesia’s Ban on Oil Palm Exports

Supply chains are currently in crisis. They have been for a long time now, ever since the start of the Covid-19 pandemic reshaped the way the world works. Stressed shipping networks and operational blockages – coupled with China’s insistence on a Covid-zero policy – means that cargo tanker rates are at an all-time high and that there just aren’t enough of them. McDonalds and KFCs in Asia are running out of French fries to sell, not because there aren’t enough potatoes in Idaho, but because there aren’t enough ships to deliver them to Japan or to Singapore from Los Angeles. The war in Ukraine has placed a particular emphasis on food supply chains by disrupting global wheat and sunflower oil supply chains and kicking off distressingly high levels of food price inflation across North Africa, the Middle East and Asia. It was against this backdrop that Indonesia announced a complete ban on palm oil exports. That nuclear option shocked the markets, set off a potential new supply chain crisis and has particular implications on future of crude oil pricing and biofuels in Asia.  

A brief recap. Like most of Asia, Indonesia has been grappling with food price inflation as consequence of Covid-19. Like most of Asia, Indonesia has been attempting to control this through a combination of shielding its most vulnerable citizens through continued subsidies while attempting to optimise supply chains. Like most of Asia, Indonesia hasn’t been to control the market at all, because uncoordinated attempts across a wide spectrum of countries to achieve a similar level of individual protectionism is self-defeating.

Cooking oil is a major product of sensitive importance in Indonesia, and one that it is self-sufficient in as a result of its status as the world’s largest palm oil producer. So large is Indonesia in that regard that its excess palm oil production has been directed to increasingly higher biodiesel mandates, with a B40 mandate – diesel containing 40% of palm material – originally schedule for full implementation this year. But as palm oil prices started rising to all-time highs at the beginning of January, cooking oil started becoming scarcer in Indonesia. The government blamed hoarding and – wary of the Ramadan period and domestic unrest – implemented a Domestic Market Obligation on palm oil refineries, directing them to devote 20% of projected exports for domestic use. Increasingly stricter terms for the DMO continued over February and March, only for an abrupt U-turn in mid-March that removed the DMO completely. But as the war in Ukraine drove prices even further, Indonesia shocked the market by announcing an total ban on palm oil exports in late April. Chaotically, the ban was first clarified to be palm olein only (straight refining cooking oil), but then flip-flopped into a total ban of crude palm oil as well. Markets went haywire, prices jumped to historical highs and Indonesia’s trading partners reacted with alarm.

Joko Widodo has said that the ban will be indefinite until domestic cooking oil prices ‘moderate’. With the global situation as it is, ‘moderate’ is unlikely to be achieved until the end of 2022 at least, if ‘moderate’ is taken to be the previous level of palm oil prices – roughly half of current pricing. Logistically, Indonesia cannot hold out on the ban for more than two months. Only a third of Indonesia’s monthly palm oil production is consumed domestically; the rest is exported. An indefinite ban means that not only fill storage tanks up beyond capacity and estates forced to let fruit rot, but Indonesia will be missing out on crucial revenue from its crude palm oil export tax. Which is used to fund its biodiesel subsidies.

And that’s where the implications on oil come in. Indonesia’s ham-fisted attempt at protectionism has dire implications on biofuels policies in Asia. Palm oil prices within Indonesia might sink as long as surplus volumes can’t make it beyond the borders, but international palm oil prices will remain high as consuming countries pivot to producers like Malaysia, Thailand, Papua New Guinea, West Africa and Latin America. That in turn, threatens the biodiesel mandates in Thailand and Malaysia. The Thai government has already expressed concern over palm-led food price inflation and associated pressure on its (subsidised) biodiesel programme, launching efforts to mitigate the worst effects. Malaysia – which has a more direct approach to subsidised fuels – is also feeling the pinch. Thailand’s move to B10 and Malaysia’s move to B20 is now in jeopardy; in fact, Thailand has regressed its national mandate from B7 to B5. And the reason is that the differential between the bio- and the diesel portion of the biodiesel is now so disparate that subsidy regimes break down. It would be far cheaper – for the government, the tax-payers and consumers – to use straight diesel instead of biodiesel, as evidenced by Thailand’s reversal in mandates.

That, in turn, has implications on crude pricing. While OPEC+ is stubbornly sticking to its gentle approach to managing global crude supply, the stunning rebound in Asian demand has already kept the consumption side tight to match that supply. Crude prices above US$100/b are a recipe for demand destruction, and Asian economies have been preparing for this by looking at alternatives; biofuels for example. In the past four years, Indonesia has converted some of its oil refineries into biodiesel plants; in China, stricter crude import quotas are paving the way for China to clamp down on its status of a fuels exporter in favour of self-sustainability. But what happens when crude prices are high, but the prices of alternatives are higher? That is the case for palm oil now, where the gasoil-palm spread is now triple the previous average.

Part of this situation is due to market dynamics. Part of it is due to geopolitical effects. But part of it is also due to Indonesia’s knee-jerk reaction. Supply disruption at the level of a blanket ban is always seismic and kicks off a chain of unintended consequences; see the OPEC oil shocks of the 70s. Indonesia’s palm oil export ban is almost at that level. ‘Indefinite’ is a vague term and offers no consolation to markets looking for direction. Damage will be done, even if the ban lasts a month. But the longer it lasts – Indonesian general elections are due in February 2024 – the more serious the consequences could be. And the more the oil and refining industry in Asia will have to think about their preconceived notions of the future of oil in the region.

End of Article

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Market Outlook:

  • Crude price trading range: Brent – US$110-1113/b, WTI – US$105-110/b
  • As the war in Ukraine becomes increasingly entrenched, the pressure on global crude prices as Russian energy exports remain curtailed; OPEC+ is offering little hope to consumers of displaced Russian crude, with no indication that it is ready to drastically increase supply beyond its current gentle approach
  • In the US, the so-called NOPEC bill is moving ahead, paving the way for the US to sue the OPEC+ group under antitrust rules for market manipulation, setting up a tense next few months as international geopolitics and trade relations are re-evaluated

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May, 09 2022
Importance of Construction Supply Online Shop

An online shop is a type of e-commerce website where the products are typically marketed over the internet. The online sale of goods and services is a type of electronic commerce, or "e-commerce". The construction supply online shop makes it all the more convenient for customers to get what they need when they want it. The construction supply industry is on the rise, but finding the right supplier can be difficult. This is where an online store comes in handy.

Nowadays, everyone is shopping online - from groceries to clothes. And it's no different for construction supplies. With an online store, you can find all your supplies in one place and have them delivered to your doorstep. Construction supply online shops are a great way to find all the construction supplies you need. They also offer a wide variety of products from different suppliers, making it easier for customers to find what they're looking for. A construction supply online shop is essential for any construction company. They are the primary point of contact for the customers and they provide them with all the goods they need.

Most construction supply companies have an online shop where customers can purchase everything they need for their project, but some still prefer to use brick-and-mortar stores instead, so it’s important to sell both in your store.

Construction supply is an essential part of any construction site too. Construction supply shops are usually limited to the geographic area where they are located. This is because, in order for construction supplies to be delivered on time, they must be close to the construction site that ordered them. But with modern technology and internet connectivity, it has become possible for people to purchase their construction supplies online and have them shipped right to their doorstep. Online stores such as Supply House offer a wide variety of products that can help you find what you need without having to drive around town looking for it.

May, 07 2022