Saudi oil output may rise in June, but US may not get the extra exports it wants
Saudi Arabia’s oil output may edge up in June, sources familiar with the kingdom’s policy said, but the extra crude may be used for domestic power generation rather than providing the boost to exports that Washington has been seeking. The sources said any rise in Saudi output would still be within its output quota in a pact on supply cuts agreed between OPEC and its allies, a group known as OPEC+. Production from the world’s top crude exporter in May is expected to be around 10 million barrels per day (bpd), slightly higher than April but still below its quota under the OPEC-led pact of 10.3 million bpd, industry sources said. Riyadh often lifts output in the hot summer months to fuel oil-fired power plants and meet rising electricity demand, which means exports do not necessarily rise. One of the sources said the May output rise was not related to Washington’s push for more OPEC oil after it ended waivers granted to buyers of Iranian oil. The waivers had allowed them to purchase crude from Iran despite U.S. sanctions. U.S. President Donald Trump said last week he had called Saudi Arabia and OPEC and told them to lower oil prices, but he did not say who he spoke to or when the conversations took place. Oil prices rose to a six-month high last week above $75 a barrel, partly due to concerns about falling Iranian supplies. Brent was trading around $70 on Thursday. “The Saudis want oil prices to stay at current levels at least for a month or two. They don’t want to raise their production above the 10.3 million bpd, because they are part of the OPEC+ pact, but they are also being pressured by the U.S. to increase their output,” one of the sources said. “One thing for sure is that if customers asked for more oil they (the Saudis) will then raise output,” the source added. SPENDING NEEDS Saudi Arabia wants oil prices of at least $70 a barrel this year as it seeks to boost the economy with extra spending, finance economic reforms and fund its four-year war in Yemen. The kingdom estimates it will have a budget deficit of 4.2 percent of gross domestic product in 2019. But the International Monetary Fund forecasts a deficit of 7.9 percent based on oil prices remaining in the mid-$60 a barrel range. Another source familiar with Saudi oil policy also said the kingdom did not want to raise output above 10.3 million bpd until the current global supply pact expired in June. “But it is not clear now what will be the demand from the customers. Apart from Iran, there are also some serious concerns about the situation in Venezuela and Libya,” the source said. Oil supplies have also tightened because of U.S. sanctions on Venezuela and another flare-up of fighting in Libya. Outages in Nigeria and the contamination of Russian oil in a major pipeline to Europe have added to supply concerns. The Organization of the Petroleum Exporting Countries and its allies agreed to reduce output by 1.2 million bpd. They meet on June 25-26 to decide whether to extend the pact. Saudi crude exports allocations for June are expected to be issued around May 10. State-run Saudi Aramco is expected to release its official selling prices for Saudi crude next week, industry sources said. The kingdom is expected to raise June prices for all crude grades it sells to Asia to track stronger Middle East benchmarks, trade sources said on Thursday. The move may discourage buyers of Saudi crude to seek more oil and push refiners to draw on inventories, which would support oil prices, delivering on Riyadh’s goal of lower stocks and higher prices while keeping its own production in check. A panel of energy ministers from major oil producers, known as the JMMC, meets on May 19 in the Saudi city of Jeddah to discuss the oil market and make recommendations before the June policy meeting.
World’s second-biggest LNG tanker class vessel to transit Panama Canal for first time
A vessel in the world’s second-largest liquefied natural gas (LNG) tanker class is set to pass through the Panama Canal for the first time, the canal’s chief executive said, expanding the Americas to Asia trade route for the fast growing commodity. The ‘Al Safliyah’, a ‘Q-flex’ tanker able to carry about 210,000 cubic metres of LNG, is currently in the North Pacific and on its way to Panama after discharging a cargo from Qatar into Korea Gas Corp’s (KOGAS) Tongyeong terminal on April 21, shipping data in Refinitiv Eikon showed. “This is the first Q-Flex to transit the Panama Canal,” Jorge Quijano, chief executive of Panama Canal Authority told Reuters. The Panama Canal was expanded in mid-2018 to handle larger oil and gas tankers, but this is the first time an LNG tanker of this size will pass through it. “This size of vessel can use the Panama Canal and could be deployed to carry LNG from the natural gas liquefaction plants in the U.S., Trinidad and Tobago and Peru,” Quijano said. The ship’s charterer is Qatargas, according to LNG trading and broker sources. Qatargas did not respond to a query for comment.
Cutting household fuel may improve India’s air quality standards
Eliminating emissions from dirty household fuels such as wood, dung, coal and kerosene without any changes to the industrial or vehicle emissions could improve India’s air quality standard, claim researchers. According to the study published in the Journal of Proceedings of the National Academy of Sciences, mitigating the use of household fuels could also reduce air pollution-related deaths in the country by approximately 13%, which is equivalent to saving about 270,000 lives a year. “Household fuels are the single biggest source of outdoor air pollution in India. We looked at what would happen if they only cleaned up households, and we came to this counterintuitive result that the whole country would reach national air pollution standards if they did that,” said co-author of the paper, Kirk R. Smith. Americans usually associate air pollution with smokestacks and car exhaust pipes. But in many rural areas of the world where electricity and gas lines are scarce, the bulk of air pollution originates from burning biomass, such as wood, cow dung or crop residues to cook and heat the home, and from burning kerosene for lighting. As of early 2016, nearly half of the Indian population was reliant on biomass for household fuel. In addition to generating greenhouse gases like carbon dioxide and methane, these dirty fuels kick out chemicals and other fine particulate matter that can stick in the lungs and trigger a whole host of diseases, including pneumonia, heart disease, stroke, lung cancer and chronic obstructive pulmonary disease. “There are 3,000 chemicals that have been identified in wood smoke, and taken at a macro level, it is very similar to tobacco smoke,” Smith said. In 2015, India’s average annual air pollution level was 55 micrograms per cubic meter (ug m-3- micrograms per cubic meter of air) of fine particulate matter. New Delhi by many estimates is the most polluted city in the world, often soared beyond 300 ug m-3. By comparison, fine particulate matter in the San Francisco Bay Area peaked at around 200 ug m-3 during the 2018 Camp Fire. Complete mitigation of biomass as fuel could be achieved through widespread electrification and distribution of clean-burning propane to rural areas. This action would cut India’s average annual air pollution to 38 ug m-3, just below the country’s National Ambient Air Quality Standard of 40 ug m-3. “While this is still far above the World Health Organization (WHO) standard of 10 ug m-3, it could still have dramatic impacts on the health of the country’s residents”, Smith said. “You can’t have a clean environment when about half the houses in India are burning dirty fuels every day. India has got to do other things to fix air pollution — they’ve got to stop garbage burning, they’ve got to control the power plants, they’ve got to control vehicles and so forth. But they need to recognize the fact that households are very important contributors to outdoor air pollution, too”, he added. “We’ve realized that pollution may start in the kitchen, but it doesn’t stay there, it goes outside, it goes next door, it goes down the street and it becomes part of the general outdoor air pollution.
India ready to deal with impact of US sanctions on Iran: Govt spokesperson
India is ready to deal with the impact of US sanctions against Iran and will get extra supplies from other oil producing countries to compensate for loss of Iranian oil, foreign ministry spokesman Raveesh Kumar told a news conference on Thursday. India was Iran’s top oil client after China. However, New Delhi has stopped purchases of Iranian oil from May after the United States ended six months of waiver that had allowed Opec member Iran’s eight top customers including India to import limited volumes.