Oil Prices Soar After Israel Kills Hamas Leader and Hezbollah Senior Commander
Geopolitical risk has well and truly returned to oil markets after Israeli strikes killed Hamas leader Ismail Haniyeh and senior Hezbollah military commander Fuad Shukr. Oil prices spiked immediately on the news and have continued to climb, with WTI rising toward $77 and Brent breaking back well above $80. The first of Israel’s two strikes on Tuesday was an airstrike on Beirut targeting Fuad Shukr who Israel claimed was responsible for Saturday’s rocket attack on the Golan Heights which killed 12 civilians, most under the age of 16. Israel’s defense minister, Yoav Gallant, said Hizbollah had “crossed the red line” with the attack, and days later launched three rockets into the Haret Hreik neighborhood in Beirut. Lebanon’s Prime Minister Najib Mikati condemned “blatant Israeli aggression” and Iran’s foreign ministry condemned the attack as “a blatant violation of Lebanon’s sovereignty and territorial integrity”. The second of the two strikes, and the one that sent oil prices spiking, came just hours later when Hamas’ political leader was killed while in Iran for the swearing-in ceremony of the country’s new president. The strike has dramatically heightened tensions in the region and is likely to undermine Gaza ceasefire talks, with Iran, Qatar, Jordan, and Lebanon all condemning Israel. The Supreme Leader of Iran, Ali Khamenei added to fears of a broader war by saying ““It is our Duty to take Revenge and Severely Punish the Zionist Entity for the Assassination in Iran, because the Assassination was carried out on our Soil.” As Hamas’ leader in exile, Ismail Haniyeh played a key role in the Gaza ceasefire talk negotiations brokered by Qatar, the US, and Egypt. His killing will undoubtedly delay and potentially derail entirely those talks. The significance of these two attacks compared to previous escalations in this conflict can be seen in recent oil price movements. Both WTI and Brent had been falling consistently for a month, hitting 7-week lows on Tuesday even after the Hezbollah rocket attack on the Golan Heights. The geography of Tuesday’s strikes is arguably more significant than the figures involved, with strikes in Beirut and Tehran marking a significant escalation in the conflict and threatening to push the region into a full-blown war.
India’s refining capacity to hit 309.5 MMTPA by 2028; GVA of petroleum products at ₹2120 billion
India’s refining capacity is projected to increase to 309.5 million metric tonne per annum (MMTPA) by 2028, said Suresh Gopi, Minister of State in the Ministry of Petroleum and Natural Gas, in a written reply in Rajya Sabha. This is an increase from the current capacity of 256.8 MMTPA, with domestic consumption of petroleum products at 233.3 MMTPA for the year 2023-24. The ministry of statistics and programme implementation (MoSPI) reported that the Gross Value Addition (GVA) of manufacturing coke and refined petroleum products rose from ₹1560 billion in 2012-13 to ₹2120 billion in 2022-23. This growth has significantly contributed to the rise in India’s GDP from ₹99440 billion to ₹269490 billion during the same period, at current prices.
America overtook UAE as India’s second largest LNG supplier in 2023
The US displaced the UAE to emerge as India’s second largest supplier of liquefied natural gas (LNG) in 2023, accounting for 3.09 million tonnes (MT). LNG is emerging as a substitute fuel in the transition towards green energy. Analysts attributed the development to weakening LNG prices in international markets as well as India’s proximity, via the Cape of Good Hope, to US LNG cargoes compared to North Asia. The US also emerged as the world’s largest LNG exporter in 2023. According to the world LNG report 2024 by International Gas Union (IG), released earlier this month, the US supplied India 1.8 MT LNG in the pre-pandemic period (2019) and the quantity increased to 3.86 MT in 2021. Evolving trade dynamics India, the fourth largest LNG importer, scaled back in 2022 owing to rising prices and shipments from the US declined to 2.16 MT. On the other hand, the UAE’s share rose from 2.6 MT in 2019 to 3.32 MT in 2020, slipped to 2.59 MT in 2022 and again rose to 2.85 MT last year. Qatar remained India’s largest LNG supplier for five years running (2019-2023); cargoes topped 10 MT, barring in 2019 when it stood at 9.7 MT. In 2023, shipments from Qatar rose to a high of 10.92 MT. Another notable development during this period is the decline in the share of African nations in India’s LNG imports. According to IGU data, Nigeria and Angola, which supplied 2.7 MT and 2.9 MT LNG, respectively, to India pre-pandemic (2019), saw their cargoes shrink to 0.73 MT each in 2023. The share of both African nations has been declining since 2021. Kenneth Foo, Associate Editorial Director at S&P Global Commodity Insights, said the US was the standout exporter in the global LNG market in 2023, overtaking Qatar and Australia with strong growth in liquefaction capacity due to investments made several years ago. Total US LNG exports were about 15 per cent higher year-on-year at 89 MT. “With India at closer proximity via the Cape of Good Hope for US LNG cargoes, compared to North Asia, sellers were more incentivised to sell volumes to India to save freight costs. The ongoing US long-term contracts signed by Indian entities also continued to underpin LNG consumption,” he told businessline. On the decline in cargoes from Africa, Foo pointed out that Nigerian LNG exports faced significant challenges in the last two years. The country’s LNG export facility at Bonny remains under force majeure since October 2022 due to disruption in gas feedstock supply. “Other LNG supply from African countries like Angola has flowed to destinations that are willing to pay price premiums such as Europe across 2022-23. Middle-east volumes remain the mainstay of supply to India due to geographical proximity and significant long-term volumes agreement,” he added. On LNG cargoes in 2023 staying below the levels recorded in 2019-21, he pointed out that from 2019 to 2021, LNG prices were significantly lower, enabling Indian companies to buy spot volumes at market prices. “Indian companies continue to be price-sensitive, and the various fuel-switching alternatives such as naphtha/ fuel oil for refiners, fuel oil and LPG for industrials, and gasoline/gasoil for transportation mean that LNG prices need to be low enough for imports to grow into 2024. Expectations are that, if prices remain below $12 per mBtu, there would be significant import growth potential for India,” Foo added.
HPCL scouts for LNG deals, hopes to start LNG terminal by December
India’s Hindustan Petroleum Corp Ltd is scouting for liquefied natural gas (LNG) import deals as it expects to start its 5 million ton per year (tpy) LNG terminal in western India by end of this year, its head of finance said on Tuesday. “We will be undertaking commissioning activity in November or December depending on weather conditions… We are in the market for tying up long-term gas from international players,” Rajneesh Narang said at its June quarter earnings call. The company’s previous attempt to commission the Chhara LNG terminal in April failed due to the bad weather, he said.