Oil Prices Jump as Israel Pounds Gaza Again After Ceasefire Deal Falls Apart
Israel has carried out “extensive strikes” on Gaza, killing at least 220, according to sources from both Israel and Gaza cited by the BBC. The strikes came as a ceasefire that began in mid-January failed with the warring parties unable to agree on the terms to extend it. The reignition of the war between Israel and the Palestinian state affects oil prices as there is always a risk of regional escalation in the conflict, notably featuring Iran. This was the case today as well, with Brent crude inching up to $71.29 per barrel and West Texas Intermediate rising to $67.78 per barrel at the time of writing. “Israel will, from now on, act against Hamas with increasing military strength,” a statement by Benjamin Netanyahu’s office said. “This follows Hamas’s repeated refusal to release our hostages, as well as its rejection of all of the proposals it has received from US Presidential Envoy Steve Witkoff and from the mediators,” the statement also said. Hamas, for its part, has called on mediators to intervene and salvage the ceasefire, although it responded to Israel’s strike with accusations of treachery and overturning the ceasefire, the BBC also reported. The Israel-Palestine war was not the geopolitical factor pushing oil prices higher. U.S. strikes on Yemen earlier in the week also acted as a booster for the benchmarks, highlighting the fragile situation in the world’s biggest oil-producing region. In addition to geopolitics, news from China also served to prop up oil prices, as Beijing released its latest round of measures aimed at stimulating consumer demand through higher salaries and childcare subsidies. The news was followed by data showing refining throughput in the country had increased over the first two months of the year, and figures suggesting rebounding consumer spending, which are normally taken as a bullish sign for crude oil demand.
Reliance exported Rs 6,850 cr worth of fuel from Russian oil to US: Report
Billionaire Mukesh Ambani’s Reliance Industries Ltd is estimated to have earned 724 million euros (about Rs 6,850 crore) from exporting fuel made from Russian crude oil to the US in one year, an European think tank said in a report. “From January 2024 to the end of January 2025, the US imported EUR 2.8 billion of refined oil from six refineries in India and Turkey that process Russian crude. An estimated EUR 1.3 billion of this was refined from Russian crude,” the Centre for Research on Energy and Clean Air (CREA) said in a report. US imports of fuels such as petrol and diesel from Jamnagar in Gujarat, where Reliance’s twin oil refineries are located, were EUR 2 billion. Of this, “EUR 724 million (is) estimated to be refined from Russian crude,” it said. Western and US sanctions on Russia, that followed its invasion of Ukraine in February 2022, do not prohibit or sanction buying/using Russian crude oil and exporting fuels such as diesel derived from it. Gujarat’s Vadinar, where Russia’s Rosneft-based Nayara Energy has a 20 million tonne a year refinery, exported EUR 184 million worth of fuel to the US between January 2024 and January 2025. Of this, EUR 124 million is estimated to be refined from Russian crude, CREA said. New Mangalore, where Mangalore Refinery and Petrochemicals Ltd (MRPL) has a unit, exported EUR 42 million worth of fuel to the US, of which EUR 22 million is estimated to be refined from Russian crude, it said. Turkey’s three refineries exported a total of EUR 616 million worth of fuel to the US, of which EUR 545 million is estimated to have come from refining Russian crude. “Russia has earned an estimated USD 750 million in tax from these imports (from India and Turkey) to the US,” CREA said. “The imports consist of gasoline (petrol) valued at EUR 294 million, which ends up in American cars. By our rough estimate, US imports of gasoline made from Russian crude could fill up almost every car in Florida.” As one third of the Russian federal budget is comprised of revenue from fossil fuel exports, sanctions are the key to ending the invasion, while simultaneously also gaining the upper hand in negotiations towards an equitable and acceptable peace for Ukraine, it added. While there are no restriction or sanctions on buying/using Russian crude oil and exporting fuels such as diesel derived from it, the Group of Seven (G7) rich nations, the European Union and Australia – called the price cap coalition countries – first set a crude price cap of USD 60 per barrel starting December 5, 2022 and later on products like diesel to keep market supplied while limiting Moscow’s revenue. This was aimed at punishing Russia for its February 2022 invasion of Ukraine by depriving it of oil revenues while averting a surge in prices that could occur if Russian oil stopped flowing to global markets. But both Europe and the US imported fuel produced from refining Russian crude oil in third world countries such as India.
China Stops Buying U.S. LNG
China has not received a single cargo of U.S. liquefied natural gas in 40 days and there are currently no LNG tankers en route to the country, Bloomberg has reported, citing data it compiled from ship-tracking information providers and energy analytics provider Kpler. The purchase freeze was the result of the tariff exchange that President Donald Trump started as soon as he took office, by slapping an additional 10% tariff on all Chinese imports. In response, China imposed 15% tariffs on U.S. LNG imports and a lower tariff of crude oil imports. Following the tariffs, Chinese LNG buyers with long-term supply contracts with U.S. producers have started reselling the cargos to Europe, Bloomberg reported, citing sources from the trading world. What’s more, Chinese traders have grown cold towards new long-term commitments for future supply from the United States, instead seeking long-term deals with gas producers in the Middle East and the Asia Pacific. The publication mentioned one new deal, between China Resources Gas International and Woodside Energy, which has a term of 15 years and is the first long-term deal between a Chinese company and an Australian company to be signed in years. The moment is rather opportune for Europe, which is nearing the end of its leak gas demand season as spring comes. Yet demand is going to remain elevated for a while as it restocks its depleted gas storage. Indeed, Kpler predicted European gas demand will tick higher in the coming weeks because it is coming out of winter with lower levels of gas in storage. Kpler also revised South Korea’s 2025 LNG demand higher—but it revised Chinese LNG demand for this year down, based on weaker LNG imports in February, part of the reason for which is quite likely the tariff exchange with the United States.
Why OPEC+ is Supporting a Potentially Disastrous Rise in Oil Production
Oil prices have fallen fast since the 3 March announcement from OPEC+ that it will go ahead with a planned rise in its collective oil production. The prospect of increased supply from the group has added to the bearish tone created by rising supply from other key producers and from uncertain demand projections from the world’s biggest importer of oil, China. Lower oil and gas prices is precisely what Donald Trump wants to see in his second term as U.S. president, but with budget breakeven oil prices much higher than even current levels, many may wonder why OPEC+ members are supporting such a potentially financially disastrous production rise. So economically vital is it to most OPEC+ members that oil prices are kept at the higher end of recent historical levels that the organisation has not increased production since 2022. In fact, at that point it had begun a series of collective oil production cuts to support oil prices, totalling around 5.85 million barrels per day (bpd), or around 5.7% of global supply. As recently as December, the cartel extended its previous round of 2.2 million bpd in output reductions to the end of this quarter. Industry estimates are that the first phase of the removal of these production cuts will total about 138,000 bpd in April, with much more to come. “Part of this move [OPEC+ oil production increases] results from repeated overproduction from some of its members, most recently from Kazakhstan [following the Tengiz expansion project], Iraq, and Russia, although Moscow has been doing a lot of it as dark inventory [unofficial output] to sidestep sanctions,” a senior source in the European Union’s (E.U.) energy security complex exclusively told OilPrice.com last week. “Another part comes from the group wanting to protect its market share, given the major shift in the supply-demand balance that’s unfolding,” he added. “And the final part of it is the fact that OPEC+ doesn’t think it can win an oil price war against the U.S. with Trump in his second presidency, given how badly it did in the last two [oil price wars],” he concluded. Indeed, over the course of the 2014-2016 Oil Price War, de facto OPEC leader Saudi Arabia spend over 34% of its precious US$737 billion foreign exchange reserves and swung from a budget surplus to a then-record high deficit of US$98 billion, as analysed in full in my latest book on the new global oil market order. So bad was Saudi Arabia’s economic and political situation back towards the end of the Second Oil Price War in 2016 (the first being the 1973-1974 Oil Crisis) that the country’s deputy economic minister, Mohamed Al Tuwaijri, stated in an unprecedentedly unequivocal way for a senior Saudi in October 2016 that: “If we [Saudi Arabia] don’t take any reform measures, and if the global economy stays the same, then we’re doomed to bankruptcy in three to four years.” Although the 2014-2016 Oil Price War had been launched by Saudi Arabia with the intention of destroying or significantly disabling the U.S.’s then-nascent shale oil industry, it only succeeded in destroying the finances of OPEC’s members and undermining the reputation of the group – and Saudi Arabia — in the global oil market. Aside from the damage to its own economy, Saudi Arabia had cost the OPEC member states collectively at least US$450 billion in revenues during the 2014-2016 Oil Price War, according to International Energy Agency (IEA) estimates. So badly had OPEC and its effective leader Saudi Arabia been hit by their own actions that Donald Trump was able to exploit this weakness to maintain a tight oil price range during his first term as president through the occasional incentive but many more threats. The lower part of the ‘Trum Oil Price Range’ is US$40-45 per barrel of the Brent benchmark, which is the price at which the bulk of U.S. shale oil producers can breakeven and make a good profit on top. The upper part of it is US$75-80 per barrel, which ties into historical data showing that a gasoline price of under US$2 per gallon has been most advantageous for U.S. economic growth. This US$2 per gallon level has historically equated to a West Texas Intermediate (WTI) oil price of around US$70 per barrel. And as WTI has also historically traded at a discount of between US$5-10 per barrel to the Brent oil benchmark, this US$70 per barrel of WTI price equates to around US$75-80 per barrel of Brent. Judging from Trump’s comments on the campaign trail and in his ‘Agenda47’ blueprint for a second term, his view that oil prices should continue to be heavily influenced by the U.S. in such a way has not changed. He will also be aware of the dramatic political consequences for U.S. presidents of oil prices rising beyond the top of the Range, as also fully detailed in my latest book on the new global oil market order. Specifically, since 1896 the sitting U.S. president has won re-election 11 times out of 11 if the economy was not in recession within two years of an upcoming election. However, sitting U.S. presidents who went into a re-election campaign with the economy in recession won only one time out of seven. Adding to their troubles in this regard, the Saudis know that Trump has much greater power in this term than he did in his first, with Republican majorities in the Senate and the House of Representatives, and his nominees dominating the Supreme Court. They also know his attitude to OPEC and the Russia-enhanced OPEC+ groups, which was marked early in his first term. More specifically, when Saudi Arabia was still trying desperately to repair the appalling damage its 2014-2016 Oil Price War had done to its own finances and to those of its OPEC brothers, it embarked on coordinated production cuts (with Russia as the new-found member of the expanded ‘OPEC+’ cartel) to push the oil price higher. Trump’s reaction was quick and unequivocal: “OPEC and
Bangladesh Govt prepares model PSC for a fresh bidding round
The government has moved to launch an onshore bidding round, 28 years after the previous one, to expedite hydrocarbon exploration in onshore areas with a view to meeting the country’s mounting natural gas demand in industries, power plants and other establishments. State-run Petrobangla has already prepared a draft of the Model Production Sharing Contract (MPSC) making the terms attractive to potential international oil companies (IOCs), a senior Petrobangla official told The Financial Express Sunday. The gas purchase price is linked with the dated Brent on a three-month rolling average basis. The MPSC terms of the previous 1997 onshore bidding round were linked to high sulfur fuel oil (HSFO) with a price floor and a ceiling. Like the MPSC for offshore blocks, the interim government has taken the initiative to sweeten the model PSC for onshore blocks in line with the recommendations from Scotland’s Wood Mackenzie. “We are working to fix the new formula so that the price could be linked to around 8.0 per cent of the dated Brent crude with a capping in the Brent crude price,” said the senior Petrobangla official. Based on the current Brent price assumption, gas price is anticipated to be in the range of around US$5.50 per million British Thermal unit (MMBtu). This would bring gas prices more in line with the costs of supplying gas from liquefied natural gas (LNG) imports which Bangladesh is projected to increasingly rely on, should the country fail to make a turnaround in its domestic gas production. If fixed under this market-based pricing formula, the new gas price for onshore blocks will be around double the highest current price offered under the existing model PSCs for onshore gas blocks. US’s Chevron is getting around US$2.76 per MMBTu against its gas sales to state-run Petrobangla, while Singapore’s KrisEnergy gets around US$2.31 per MMBTu under the current gas pricing formula linked to HSFO. Petrobangla also purchases natural gas from three of its subsidiary state-owned companies. It purchases gas from state-run Sylhet Gas Fields Ltd (SGFL) and Bangladesh Gas Fields Ltd (BGFCL) at Tk 28 per Mcf (1 thousand cubic feet) and from state-run Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) at Tk 112 per Mcf. The price of LNG imported from long-term contract suppliers — Qatar Energy and OQ Trading International — was US$10.66 per MMBTu and US$ 10.09 per MMBTu respectively during the first seven months of the current fiscal year (FY) 2024-25 until January 2025. Petrobangla is also working on narrowing down differences of exploration benefits to attract the IOCs to take part in the next onshore bidding round. Petrobangla had floated the last bidding round for 24 offshore blocks last year under the Model PSC 2023 with no response from the IOCs. Under the Model PSC 2023, gas was priced at 10 per cent to dated Brent on a three-month rolling average basis. Based on the current Brent price assumption, the gas price would be in the range of around US$7.08 per MMBtu.
Indian Oil Marketing Companies Launch New Biodiesel Tender for FY 2025-26
India’s state-owned Oil Marketing Companies (OMCs) have initiated a fresh tendering process for biodiesel procurement, seeking approximately 200 million liters for the first quarter of the upcoming financial year starting April 2025. The latest tender was announced last week by Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL). The move follows the previous fiscal year’s ambitious target of 860 million liters, signaling the government’s continued commitment to advancing its bio diesel programme “Ethanol has benefited from a more focused policy push, regulated supply chains, and effective pricing mechanisms,” explained Dr. Rajeev Kumar, an energy policy expert at the Center for Policy Research. “Biodiesel, meanwhile, has struggled with feedstock security and economic viability issues that haven’t been addressed with the same urgency.
GAIL issues swap tender for six LNG cargoes, sources say
GAIL (India) Ltd has issued a swap tender offering six liquefied natural gas (LNG) cargoes for loading in the United States in exchange for six cargoes to be delivered to India GAIL has 20-year deals to buy 5.8 million metric tons a year of U.S. LNG, split between Dominion Energy’s D.N Cove Point plant and Cheniere Energy’s LNG.AS Sabine Pass site in Louisiana.
Asia’s green jet fuel ambitions exceed demand, heralding exports
Asia’s ability to supply sustainable aviation fuel will outpace regional demand this year and next as more production comes online, increasing exports and potentially lowering prices for the fuel, oil executives and analysts said. Planned SAF production could take a hit if regional demand remains tepid and prices fall below production costs, industry sources say, though Asia’s increased capacity is good news for airlines that have been complaining SAF is too expensive and hard to source. At least five SAF projects in Asia, outside of China, have started up or are earmarked to start production this year, targeting exports regionally and to Europe. Unlike in Europe, where flights departing EU and UK airports must now use 2 per cent SAF in their tanks, Asia’s mandated demand remains low with compulsory use of the renewable fuel in some nations to start only later this decade.