Oil prices slide on Beijing COVID warning, inflation concerns

Oil prices slipped more than USD2 on Monday as a flare-up in COVID-19 cases in Beijing quelled hopes for a rapid pick-up in China's fuel demand, while worries about global inflation and economic growth further depressed the market, said Hydrocarbonprocessing.

Brent crude futures fell USD2.06, or 1.7%, to USD119.95 a barrel by 0033 GMT while U.S. West Texas Intermediate crude was at USD118.54 a barrel, down USD2.13, or 1.8%. Prices tumbled after Chinese officials warned on Sunday of a "ferocious" COVID spread in the capital and announced plans to conduct mass testing in Beijing until Wednesday.

Concerns about further interest rate hikes following a sharp rise in U.S. inflation data on Friday are also weighing on global financial markets. "The stronger greenback and stagflation fears proved to be the bullish market's undoing," Stephen Innes of SPI Asset Management said in a note.

"China remains the significant near-term downside risk, but most view the gradual normalisation of Chinese demand as a powerful positive for oil despite the potential for lockdown noise in the coming weeks as current demand is far from reflecting normal conditions."

Both global oil benchmarks rose more than 1% last week after data showed robust oil demand in the world's top consumer, the United States, despite inflation concerns and on hopes that consumption in China - global no. 2 consumer - could rebound after lockdown measures were lifted from June 1.

Oil producers and refineries are running full-throttle to meet peak summer demand, while traders are closely watching for a possible impact from labour disputes in Libya, Norway and South Korea on oil exports and consumption. To boost supplies in the West, Saudi Arabia, the world's top exporter, planned to divert some crude to Europe from China in July, traders said.

As per MRC, Saudi Aramco has notified at least five North Asian refiners, mostly Chinese, that it will be supplying less than contracted volumes of crude oil in July. The cuts to Chinese refiners come as more cheap Russian oil heads to the world's top oil importer, which has refused to condemn Russia's invasion of Ukraine. Chinese oil demand has also been depressed by COVID-19 restrictions in the past two months. In addition, demand for Saudi crude has been climbing in Europe where the European Union has moved to phase out Russian crude and European buyers are racing to find other suppliers.
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Solvay’s Changshu site has significantly increased production capacity for Solef® PVDF, demonstrating the Group’s commitment to meeting the needs of customers worldwide, said the company.

Solvay continues to extend its leadership position in the global lithium-ion battery market with the early completion of its PVDF capacity increase in Changshu, China. The Group has now more than doubled the onsite production volume of its high-performance polymer Solef® polyvinylidene fluoride since mid-May 2022.

The rapid growth of electric and hybrid vehicles is driving record demand for PVDF. This thermoplastic fluoropolymer is used both as a binder and a separator coating in lithium-ion batteries. It plays an essential role in ensuring that batteries perform better, last longer and operate safely. Developed using Solvay’s research and innovation expertise in fluorinated chemistry and polymerization technology, Solef® PVDF is an industry-leading product, inspiring the continuous development of new solutions that will help meet customers’ needs both now and in the future.

Solvay also recently announced significant investment in Solef® PVDF production at its site in Tavaux, France, which will turn it into the largest PVDF production site in Europe. The increased production capacity in China serves as further evidence of the Group’s deep commitment to ensuring that material is readily available to customers worldwide.

As per MRC, Solvay has started works related to expansion plans that include installing equipment to increase sulfone polymers capacity at its plant in Marietta, Ohio, according to a mid-May publication by the USW Oil Workers union.

We also remind that in August, 2020, through the acquisition of the Solvay polyamide (PA) business, BASF enhanced its R&D capabilities in Asia Pacific with new technologies, technical expertise, and upgraded material and part testing services. BASF is planning to integrate the R&D centers from Solvay into its R&D existing facilities in Shanghai, China, and Seoul, Korea. The enhanced capabilities will boost BASF’s position as a solution provider to develop advanced material solutions for key industries.

Solvay is a science company whose technologies bring benefits to many aspects of daily life. With more than 24,100 employees in 64 countries, Solvay bonds people, ideas and elements to reinvent progress. The Group seeks to create sustainable shared value for all, notably through its Solvay One Planet plan crafted around three pillars: protecting the climate, preserving resources and fostering better life. The Group’s innovative solutions contribute to safer, cleaner, and more sustainable products found in homes, food and consumer goods, planes, cars, batteries, smart devices, health care applications, water and air purification systems. Founded in 1863, Solvay today ranks among the world’s top three companies for the vast majority of its activities.
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U.S. President Joe Biden is looking at ways to bring in more oil supplies amid rising energy costs, including working to address oil refinery capacity, White House economic adviser Cecelia Rouse said on Friday, as per Hydrocarbonprocessing.

"He is looking for what he can do administratively, whether that's working with oil companies and refineries asking them, 'We recognize your back capacity challenges - what can we do to help you maintain your refining capacity and bring more oil online?'" Rouse, chair of the White House Council on Economic Advisers, said in an interview with CNN.


The White House is considering proposals that would tax oil and gas windfall profits, a U.S. official said last week. Rouse, asked about that tax and possibly lifting some China tariffs, confirmed that all options remained on the table.

"We want to do so in a way that is strategic and benefits the U.S. workers, U.S. businesses, U.S. economy writ large, but that is certainly on the table," she said. Some of the ideas require working with Congress, she said.

Biden has come under intense pressure to ease price pressures, especially for gasoline, before November’s midterm elections with his Democratic Party’s control of Congress on the line.

As per MRC, The White House is considering waiving U.S. gasoline environmental rules aimed at reducing summertime smog, hoping the waiver will combat rising pump prices, according to three sources involved in the discussions. The Biden administration is considering waiving U.S. gasoline environmental rules aimed at reducing summertime smog, hoping the waiver will combat rising pump prices, according to three sources involved in the discussions.
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Iran and Venezuela, oil producers grappling with crippling U.S. sanctions, signed a 20-year cooperation plan in Tehran, with the Islamic Republic's supreme leader saying the allies would continue to resist pressure from Washington, said Hydrocarbonprocessing.

The signing ceremony, carried by Iranian state TV, was overseen by Iranian President Ebrahim Raisi and his Venezuelan counterpart Nicolas Maduro and took place at the Saadabad Palace in north Tehran. The plan includes cooperation in the fields of oil, petrochemicals, defence, agriculture, tourism, and culture. It also includes repair of Venezuelan refineries and the export of technical and engineering services.

"Venezuela has shown exemplary resistance against sanctions and threats from enemies and Imperialists," Iran's Raisi said. "The 20-year cooperation document is testimony to the will of the two countries to develop ties." "Sanctions and threats against the Iranian nation over the past 40 plus years have been numerous, but the Iranian nation has turned these sanctions into an opportunity for the country's progress," he said.

Maduro said through an interpreter that a weekly flight from Caracas to Tehran would begin on July 18. In a meeting with Maduro, Supreme Leader Ayatollah Ali Khamenei vowed Iran would continue to back Venezuela in the face of U.S. pressures, according to state media.

"The successful experience of the two countries showed that resistance is the only way to deal with these pressures," Khamenei said. "The two countries have such close ties with no other country, and Iran has shown that it takes risks in times of danger and holds its friends' hands."

Maduro said: "You came to our aid when the situation in Venezuela was very difficult and no country was helping us." Defying U.S. pressures, Iran has sent several cargos of fuel to Venezuela and helped in refinery repairs. Last month, Venezuela began importing Iranian heavy crude, widening a swap agreement signed last year to exchange Iranian condensate for Venezuelan heavy crude.

Maduro arrived in Tehran on Friday with a high-ranking political and economic delegation after visiting Turkey and Algeria.

During the visit, Iran delivered to Venezuela the second of four Aframax-sized oil tankers, with a capacity of 800,000 barrels, ordered from the Iranian company SADRA, state media said. SADRA has been under U.S. sanctions for more than a decade over its links to Iran's elite Revolutionary Guards.

In May, Iran's state-owned National Iranian Oil Engineering and Construction Co signed a contract worth about 110 MM euros to repair Venezuela's smaller 146,000 bpd refinery.

As per MRC, Venezuela's oil exports last month fell to the lowest level since October 2020 as repairs at the country's main oil port added to delays shipping cargoes, documents from state-run PDVSA and vessel tracking data showed.
Exports from the U.S.-sanctioned country were recovering this year following a pact with Iran that provided a stable supply of diluents needed for producing exportable grades and lighter crudes for making refined products.
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Chemical company INEOS Olefins Belgium is the first industrial player to sign an agreement with Fluxys to participate in the feasibility study for the development of an open access hydrogen network in the port of Antwerp, said the company.

The cooperation follows the market consultation initiated by Fluxys last year to match supply and demand for hydrogen in the Belgian industrial clusters. The European Commission considers hydrogen essential for becoming carbon-neutral. When hydrogen is used as a fuel, it is carbon-free and essentially only water vapour is emitted. It is also an important raw material for the chemical industry.

Project ONE, the investment project for the construction of an ethane cracker on the right bank in the port of Antwerp, could play a significant role in the dimensioning of the hydrogen network in Antwerp. Depending on the future transition to net zero emissions and the scenario chosen, the plant has the potential to take around 100 000 tonnes of hydrogen off the grid.

Ralf Gesthuisen, Technology Manager of Project ONE: "We have identified several technological paths for Project ONE that would allow us to further reduce our emissions and achieve the transition to climate neutrality. One of them is to use more hydrogen as a fuel for our cracker's furnaces and steam boilers. From day 1 of the start-up of our plant, we have been able to meet 60% of the heat demand with the high volumes of hydrogen from the cracking process. If we gain access to more low-carbon hydrogen in the future, we can increase this to 100% and bring the emissions of Project ONE to net zero. Our participation in Fluxys' feasibility study brings us one step closer to making this a reality."

Raphael De Winter, Director Business Development & Innovation at Fluxys: "With Fluxys we are fully committed to helping develop a well-functioning market for hydrogen quickly. This requires an open access grid to which everyone can connect on an equal footing so that supply and demand can find each other smoothly. We are working on infrastructure proposals in the various industrial clusters in Belgium, providing connections between the clusters and to neighbouring countries, and working on import possibilities. In Antwerp, the interest shown by INEOS Olefins Belgium is an important step in the development of the infrastructure needed by industry. The train is leaving now: with the interest of all the companies combined, we will complete the studies for the grid in Antwerp early 2023 and conclude contracts in the first half of 2023 to be able to build."

As per MRC, INEOS is to develop a dedicated acetonitrile unit at its Cologne, Germany site to capitalise on anticipated pharmaceuticals sector demand for the material. The company is to develop a 15,000 tonne/year production facility at the site to enhance supplies for its European customer base, on the back of anticipated demand from the pharmaceutical, agrochemical and bioscience sectors.

We remind that in April 2021, INEOS Styrolution, Recycling Technologies and Trinseo announced that they had reached a significant milestone in their plans to build commercial polystyrene (PS) recycling plants in Europe. Recycling Technologies has been selected as the technology partner.

INEOS Styrolution is the leading global styrenics supplier, with a focus on styrene monomer, polystyrene, ABS Standard and styrenic specialties. With world-class production facilities and more than 90 years of experience, INEOS Styrolution helps its customers succeed by offering solutions, designed to give them a competitive edge in their markets. At the same time, these innovative and sustainable best-in-class solutions help make the circular economy for styrenics a reality. The company provides styrenic applications for many everyday products across a broad range of industries, including automotive, electronics, household, construction, healthcare, packaging and toys/sports/leisure. In 2020, sales were at 4 billion euros. INEOS Styrolution employs approximately 3,600 people and operates 20 production sites in ten countries.
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