Pakistan PM says first discounted Russian crude oil cargo arrives in Karachi

Pakistan's Prime Minister Shehbaz Sharif on Sunday said the first cargo of discounted Russian crude oil arranged under a new deal struck between Islamabad and Moscow had arrived in Karachi, said Reuters.

"Glad to announce that the first Russian discounted crude oil cargo has arrived in Karachi and will begin oil discharge tomorrow," Sharif tweeted. "This is the first ever Russian oil cargo to Pakistan and the beginning of a new relationship between Pakistan and Russian Federation," he added.

A port official said on Sunday evening that the oil was in the process of being unloaded. Reuters first reported on the deal in April. The discounted crude offers a relief to Pakistan, which is facing a payments crisis and is at risk of defaulting on its debt.

Pakistan's purchase gives Russia a new outlet, adding to Moscow's growing sales to India and China, as it redirects oil from western markets because of the Ukraine conflict. Energy imports make up the majority of Pakistan's external payments. The country's imports of crude are expected to reach 100,000 barrels per day after the first cargo arrives on Monday.

There has been no confirmation of how payment would be made, but Pakistan recently announced a plan to allow barter trade with Russia, Afghanistan and Iran, which analysts said could reduce the need for dollars and the risk of cross-border smuggling of energy products.

We remind, Russia agreed to extend its existing 0.5 million bpd curbs into 2024, Angola and Nigeria agreed to give up their unused quotas. The United Arab Emirates was allowed to boost its production quota by 0.2 million bpd to 3.2 million from 2024.

mrchub.com

Denmark's Maersk said on Monday it has secured fuel for the first container vessel able to run on carbon-neutral methanol on its inaugural journey, from South Korea to Denmark, said Hydrocarbonprocessing.

The 21,500 km long summer trip from Ulsan to Copenhagen will be fueled by bio-methanol fuel produced from biogas captured from decomposing organic landfill waste. This will be delivered from a U.S. plant by Dutch company OCI Global.

"The green methanol market is still in its infancy and frankly we had not expected to be able to secure a maiden voyage on green methanol for this vessel," said Morten Bo Christiansen, Head of Energy Transition at Maersk. Maersk has ordered 19 methanol-enabled ships in an effort to reach its goal of transporting 25% of ocean cargo using green fuels by 2030. Overall the Danish shipping company aims to reach net zero greenhouse gas emissions by 2040.

"We expect a diverse green fuel mix for the future, with green bio-methanol from biomass waste being available now," Christiansen said. Sourcing greener fuels remains one of the main challenges to achieving its targets and Maersk has forged multiple partnerships with suppliers and ports to keep a steady supply.

It has, for example, agreed to buy half of the capacity at a plant making e-methanol from sustainable energy in Denmark and team up with a Shanghai port on green methanol marine fuel.

We remind, Saudi petrochemicals maker Sipchem has signed an agreement with shipping giant Maersk that will enable the two parties to collaborate on ocean transportation and storage at the King Abdullah Port. Through this agreement, Sipchem is aiming to expand its export base, the company said in a press release. The deal will enable Sipchem to gain a stronger position among regional and international petrochemical producers, it said.

mrchub.com

Oil prices fell on Monday ahead of a U.S. Federal Reserve meeting as investors tried to gauge its appetite for further rate hikes and amid concerns about the prospects for Chinese demand and rising Russian supply, said Hydrocarbonprocessing.

Brent crude futures was down USD1.42, or 1.9%, to USD73.37 a barrel by 0902 GMT. U.S. West Texas Intermediate (WTI) crude was at USD68.61, down USD1.56 or 2.2%. Last week both benchmarks posted a second straight weekly decline as disappointing Chinese economic data raised concerns about demand growth in the world's largest crude importer.

That helped erase a boost in prices after Saudi Arabia pledged to cut production in July by 1 million barrels per day (bpd). "Oil prices are caught in a clash between two opposing forces, bearish asset allocators who point to monetary contraction and bullish oil speculators expecting lower inventories in 2H23," Bank of America Global Research's Francisco Blanch said in a note.

"The bearish allocators will maintain the upper hand for now, as oil prices struggle to rally until the Fed eases money supply," Blanch said. The bank still expects Brent crude to average about USD80 a barrel in 2023. The Fed's rate hikes have strengthened the greenback, making dollar-denominated commodities more expensive for holders of other currencies and weighing on prices.

Most market participants expect the U.S. central bank to leave interest rates unchanged when it concludes its two-day monetary policy meeting on Wednesday. On the supply side, while Saudi Arabia has cut oil production four times in the past year, Russian supply has held up as sanctions were engineered in a way to have less of an impact on output, Blanch said.

Russian oil exports to China and India have grown despite the implementation of the European Union's embargo and the Group of Seven's price cap mechanism that took effect in early December. Goldman Sachs cut its oil price forecasts on higher-than-expected supplies from Russia and Iran and raised 2024 supply forecasts for the two producers and Venezuela by a total 800,000 bpd.

The bank's December crude price forecast now stands at USD86 a barrel for Brent, down from USD95, and at USD81 a barrel for WTI, down from USD89.

We remind, Russia agreed to extend its existing 0.5 million bpd curbs into 2024, Angola and Nigeria agreed to give up their unused quotas. The United Arab Emirates was allowed to boost its production quota by 0.2 million bpd to 3.2 million from 2024.

mrchub.com

Venezuela's state energy company Petroleos de Venezuela PDVSA has resumed operation at the catalytic cracking unit at the El Palito refinery, a government-allied legislator and seven sources familiar with the matter told Reuters.

The refinery's reactivation, almost one year after its stoppage, is a key move to alleviate the recent fuel shortage in the South American nation.

El Palito, the country's smallest refinery, is undergoing major repairs and expansion projects after a 100-million-euro deal signed with the state-owned Iranian National Company of Petroleum Refining and Distribution (NIORDC).

It has a production capacity of 146,000 barrels per day (bpd), and the plant's fluidized catalytic cracking (FCC) unit has already restarted with a production of 20,000 bpd, workers at the plant said. The unit is expected to be at full capacity by Monday, legislator Willian Rodriguez told Reuters.

Shaky operations and frequent stoppages in Venezuela's 1.3 million-bpd oil refining system have led to intermittent fuel shortages over recent years, forcing drivers to queue for hours to fill up their tanks.

Iran has provided the government of President Nicolas Maduro with fuel and diluents to convert its extra-heavy crude into exportable varieties and since 2020 it has been supplying parts to repair Venezuela's refining circuit.

We remind, PDVSA has allocated an oil cargo to a unit of Eni for a February loading, the first to the Italian firm following a contract suspension this year by new management at the state-run company, people familiar with the matter said. Eni and Spanish oil firm Repsol in May last year received authorizations from the U.S. State Department to take the crude to Europe for outstanding Venezuela debt and dividends, an exception to U.S. oil sanctions on Venezuela.

mrchub.com

China's Unipec, the trading arm of top Asian refiner Sinopec, has emerged as a major seller of August-loading Oman crude this month, a move that has helped to cap benchmark prices despite Saudi Arabia's plans to cut output next month, said Reuters.

Unipec, according to trade sources and data collated by Reuters, has sold 8 million barrels of Oman crude since the start of June on S&P Global's trading platform, also known as the Platts window and used to assess the Dubai price, benchmark for millions of barrels exported from the Middle East.

It was not immediately clear why Unipec was selling large volumes of Oman crude. Traders and analysts said tepid fuel demand from a slower-than-expected economic recovery has squeezed refining margins in China; plus Unipec and other Chinese refiners have been bringing in more barrels from Russia, West Africa, the United States and Brazil.

Sinopec did not respond to a request for more detail on the sales or the reasons behind them. Unipec sold the Oman cargoes to Totsa, trading arm of TotalEnergies, PetroChina Hong Kong , Shell and Trafigura, the data collated by Reuters showed.

The unusually large Oman crude sales began on June 1, traders said, just ahead of Saudi Arabia's surprise June 4 move to cut July output by 1 million barrels per day and as the world's biggest producer raised its official selling prices.

The trades helped cap spot premiums of benchmark Dubai prices to under USD1 a barrel for most of June, Reuters data showed, despite the prospect of tighter Saudi supplies. Unipec made no such sales in May, and in the last year it has typically sold less than 2.5 million barrels of Middle Eastern crude over the Platts window each month.

The sales have occurred as June crude deliveries to China are forecast to rise after hitting the third-highest monthly level in May, data from analytics firms Kpler and Vortexa showed.

In addition to a huge influx of Russian oil into China, June imports of U.S. crude are set to hit a record high of 30 million barrels, while more than 32 million barrels of West African crude will reach China, the Kpler and Vortexa data showed.

Unipec in recent months has been among those boosting oil purchases from West Africa, the U.S. and Brazil, traders said. Strong crude imports and refinery maintenance in the second quarter have also boosted China's commercial crude inventory to 962 million barrels, the highest since end-2020, said Emma Li, analyst from data analytic firm Vortexa.

Some 1.22 million barrels-per-day of refining capacity in China were shut for maintenance in May, according to a Reuters calculation. And Chinese state refiners lowered operating rates to about 76% in May from about 77% in April, according to data compiled by Longzhong consultancy.

The run cuts come as China's refining margins were assessed at about 461 yuan ($64.53) a ton in May, down 45% from April, Longzhong data showed. In contrast, the data also showed, margins at independent refineries known as teapots in the oil hub of Shandong province were around 1,136 yuan a ton as they binged on cheap oil from Russia, Iran and Venezuela.

We remind, Russia agreed to extend its existing 0.5 million bpd curbs into 2024, Angola and Nigeria agreed to give up their unused quotas. The United Arab Emirates was allowed to boost its production quota by 0.2 million bpd to 3.2 million from 2024.

mrchub.com