Marine Link
Tuesday, May 22, 2018

Oil Price Crisis News

Oil Up as U.S., China hit the Trade War Pause Button

Oil prices rose on Monday as markets reacted to news that China and the United States have put a looming trade war between the world's two biggest economies "on hold". Brent crude futures were at $79.13 per barrel at 0121 GMT, up 62 cents, or 0.8 percent, from their last close. Brent broke through $80 for the first time since November 2014 last week. U.S. West Texas Intermediate (WTI) crude futures were at $71.83 a barrel, up 55 cents, or 0.8 percent, from their last settlement. The U.S. trade war with China is "on hold" after the world's largest economies agreed to drop their tariff threats while they work on a wider trade agreement, U.S. Treasury Secretary Steven Mnuchin said on Sunday, giving global markets a lift in early trading on Monday.

Hapag-Lloyd Delays Recovery Hopes

(Photo: Hapag-Lloyd)

German container shipping line Hapag-Lloyd reported a higher net profit and operating result in the first quarter of 2018 on Monday, citing better transport volumes, but said earnings improvements would mostly be made in the second half."We have had a solid start into the current year, but the market environment is challenging," Chief Executive Rolf Habben Jansen said."Freight rates have been under pressure, bunker costs and trucking costs in some important markets were up and we faced a weaker U.S.

Lubmarine Outlines Position in Supply Crisis

Marine lubricants supplier TOTAL Lubmarine has outlined its position concerning increasing raw material costs and growing shortages of marine lubricants. Andrew Knox, Head of Marketing at TOTAL Lubmarine, says, "Recent events have shown how tight the worldwide situation is. This is due to a long historical period of low and decreasing margins which have discouraged the industry from investing. "With the 2004 and 2005 increases in crude oil and lubricant raw material market prices, industry profitability has worsened, and the incredible acceleration in cost increases in recent months puts the industry in an unprecedented position of vulnerability. Since July, base oil price costs have increased by between 24 and 35 percent.

An Unlikely and Remarkable Safety Journey

(Credit: Gregory Thorp)

Late last year, the Transportation Research Board released a major study that was undertaken “in response to the rapid development of domestic sources of energy and questions about the safest ways to move these products.” The Study Committee examined the operational responses of the three primary modes impacted by the fracking revolution – rail, pipeline and maritime. A primary observation of this work was that that the “Marine Transportation System Offers a Model for Robust Safety…

Maersk: Disappointing Q1 Earnings Hit Share Price

(Photo: A.P. Moller-Maersk)

A.P. Moller-Maersk missed first-quarter profit expectations on Thursday and warned that political and trade tensions clouded the outlook, sending shares in the world's biggest container shipper sharply lower.Earnings before interest, tax, depreciation and amortization (EBITDA) for the three months to March 31 rose 5 percent to $669 million but came in well below the $852 million forecast by analysts in a Reuters poll.Chief Executive Soren Skou called the result "unsatisfactory"…

New Rules on Ship Emissions Herald Sea Change for Oil Market

© xy / Adobe Stock

New rules coming into force from 2020 to curb pollution produced by the world's ships are worrying everyone from OPEC oil producers to bunker fuel sellers and shipping companies.The regulations will slash emissions of sulfur, which is blamed for causing respiratory diseases and is a component of acid rain that damages vegetation and wildlife.But the energy and shipping industries are ill-prepared, say analysts, with refiners likely to struggle to meet higher demand for cleaner…

China's Crude Oil Futures Boom Amid Looming Iran Sanctions

© Igor Groshev / Adobe Stock

A U.S. decision to reimpose sanctions on Iran is supporting China's newly established crude oil futures, and may spur efforts to start trading oil in yuan rather than dollars, traders and analysts said.Since launching in March, Shanghai crude oil futures have seen a steady pick-up in daily trading, while open interest - the number of outstanding longer-term positions and a gauge of institutional interest - has also surged.Traded daily volumes hit a record 250,000 lots last Wednesday…

The U.S. Gulf Market: When Will It Turn Around?

Discussions around our office and with various clients usually entail an exchange of anecdotal information believed to explain the current situation with the quest to predict when things will turn around. There are a host of different viewpoints, most seemingly relevant, but no one satisfactory answer. In previous downturns in the offshore service sector, there was usually a fairly clear understanding embraced by most of why things were slow. This downturn is more difficult to understand. Back in 1998 when the Asian financial crisis impacted oil prices, it was easy to see why E&P fell. This downturn also affected most oil fields around the world about the same. The price of oil was too low to drill new wells and upgrade production at a profit.

Projections center on When, not If

The cyclical nature of the offshore exploration and production beast is legendary in financial circles, riding boom and bust waves for years at a time. While industry analysts and insiders alike had forecast a pick-up in activity no sooner than mid-year 2000, the collective industry is “itching” to get back to the business of building, repairing and supplying the myriad of rigs, boats and other business opportunities that abound in a full-blown boom oil market. Patience, it seems, is wearing thin, particularly in the face of dwindling business prospects and the lingering of the $30+ barrel of oil. While it seems all too natural that sustained high prices would sooner than later drive a resurgence of the moribund offshore business…

Offshore Recovery Stalled For Now

As crude oil prices reach Gulf War highs and recent memories of historic low crude prices fade, capital spending on finding and developing new oil reserves continue to play catch up. "The recent oil-price crisis set back non-OPEC output growth for at least a year," a recent report released by Deutsche Banc Alex. Analysts say there is a lag time for exploration spending to play catch up with oil prices - for every one month when crude prices are below the cost of production, it takes three months of high prices to regain the volume of production lost during the low cost period. Crude prices began to rebound from lows near $10 a barrel when OPEC and other major producers cut crude production to raise prices in March 1999.

Oil Instability, Consolidation Muddy Offshore E&P Picture

The cyclical nature of the oil business has blossomed into full bloom during the latter part of 2000, as a host of political power plays have sent oil prices on a virtual rollercoaster, albeit mostly up, helping to send it soaring as high as $37/barrel at the time of this writing. The business of accurately predicting the direction in which oil pricing will go has seemingly become less of a science and more of a speculative game. While it was the Asian financial crisis which led prices to the cellar in 1997, it is another crisis — the potential advancement of hostilities in the Middle East — which have helped to send the price back up to near decade (read: Gulf War) heights.

Oil Prices At Nine-Year High As Iraq Suspends Exports

Oil prices rocketed to a new nine-year high Nov. 22 after Iraq suspended oil exports under its humanitarian exchange program with the United Nations. London January Brent futures opened at $25.90, the highest oil price since January 1991 when allied forces were preparing to eject Iraqi troops from Kuwait. Prices leapt as Iraq's Oil Minister Amir Mohammed Rasheed confirmed that Iraq had stopped oil deliveries under the latest six-month phase of its oil-for-food exchange with the UN. Baghdad protested the UN's proposal to extend by two weeks the sixth phase of the program and accused the United States of trying to push other Security Council members into accepting a draft resolution on weapons inspections.

Jotun Coatings Announces Price Increase

Jotun has acknowledged the steep rise in the cost of raw materials through 2010 used in some of their coatings. This rise in costs has significantly affected all paints and coatings manufacturers worldwide. Consequently, Jotun has been forced to increase prices on some of its products, but emphasises that it has not affected its entire range. Throughout 2010 the market price of major raw materials used in coatings, such as epoxies, titanium dioxide, acrylics and metal-based materials has increased by up to as much as 50 per cent. The surprisingly high global demand coupled with the downscaling of capacity following the 2007 financial crisis has caused an imbalance in the raw materials market for coatings…

Venezuela Crisis Deepens, Oil Prices Soar

As the politically induced strikes continue to sweep Venezuela, oil prices jumped to a two month high, reflecting the lack of output from the world's fifth largest oil exporter. International benchmark Brent soared 86 cents to $28.07 a barrel by early afternoon in London, its highest level since October 17. U.S. crude futures jumped 64 cents to $29.08. The strikes have been spurred by a serious division among the Venezuelan people, half who are trying to force controversial president Hugo Chavez to resign, and half who staunchly support the embattled leader. Crude oil has risen by 20 percent in the past month because of the Venezuelan stoppage and the threat of a U.S. attack on Iraq.

Wells Fargo Calls $100 Oil a 'Pipe Dream'

Image: Organization of the Petroleum Exporting Countries

USD 100 per barrel oil  is but a “pipe dream,” Wells Fargo said in a new investor note, reports MarketWatch. The report quoted Wells Fargo’s John LaForge saying that he’s doesn’t expect oil prices to climb anywhere near $100 a barrel over the next few years. Barrels price will bounce between $30 and $60 in the coming years, according to top bank’s diagnosis. “We continue to hear that big cutbacks are on the cusp of happening,” he said. “The evidence, however, implies otherwise. Shale production has caused American output to stand higher than it did in 2014, before the oil price crisis began.

Fossil Fuels Still Attractive Despite Financial Crisis

New York - Demand for oil and natural gas continues to grow, despite the current economic downturn, indicating a positive future outlook for oilfield services, according to a new report by business intelligence expert GBI Research. The new report shows that, for the most part, the global oilfield services industry has grown exponentially over recent years, witnessing a rapid increase in revenue and advancement in technologies. Increased exploration and production activities have seen the discovery of reserves in new regions, necessitating an expansion in oilfield services. A significant rise in unconventional plays within the North American region has necessitated an increase in the demand for pressure pumping services…

Oil Prices May Fall in Q3 Say Citigroup

Weakening economies in Europe, Asia, cause Saudi to produce surplus crude Citigroup Inc. has said oil prices may fall in the third quarter, as economies weaken in Europe and Asia and Saudi Arabia produces surplus crude, Bloomberg reports. Increased crude production from Saudi Arabia and Iraq may be a "major downside risk to prices" if the economic crisis worsens, said Citigroup analyst in New York, Edward Morse. "Saudi Arabia continues to push prices lower" by cutting June official selling price differentials to Asia and increasing output to about 10 million barrels a day, Morse said. "What's most dangerous to prices would be a repeat of conditions in 1997-1998, when Saudi overproduction coincided with an unexpected Asian financial crisis that hit hard at demand."    

Rig Rates Down 10 Percent

According to a Nov. 25 report from Business Standard, the current global credit crisis and an over 63 percent fall in crude oil prices in the last four months have resulted in oil companies drilling fewer wells in offshore areas. This has increased the availability of rigs across the world and helped bring down rig rentals by up to 10 percent in the recent past. The rig rates have corrected primarily in the shallow water fields where there have been traditionally more rigs available. (Source: Business Standard)

Ship Recycling Prices Plunge 25%

Demolition Prices for elderly ships have fallen by a quarter in 2012 to date, and owners are encouraged to dispose of recycling candidates sooner rather than later, says Mark Williams of Braemar Seascope. Addressing the 7th Annual Ship Recycling Conference in London on 19th June, the Braemar Seascope Research Director told delegates that deflating international steel prices were likely to translate into lower offers for recycling tonnage in the coming quarters. Meanwhile, rapid reductions in the value of the Indian…

Jacques de Chateauvieux, CEO, Bourbon

The plan, on its face, was simple. At the turn of the century Bourbon embarked on the path to become a dominate player in the global offshore supply vessel sector, building technologically sophisticated vessels for a good price in emerging Chinese shipyards, among others globally. Dubbed Horizon 2012, the plan was backed with a multi-billion dollar investment, a world economy that was firing on all cylinders and an offshore oil and gas market that was steamrolling ahead, powered by oil prices in the region of $150. That was yesterday.

Poland Cuts Dependence on Russian Oil but at a Cost

© Nightman1965 / Adobe Stock

Poland's imports of Russian oil last year fell to their lowest level since 2005, a central bank report published on Tuesday showed, though Warsaw's bid to diversify its energy imports also meant paying higher prices.Russian oil accounted for 76 percent of all oil purchases, down from 96 percent in 2012, as state-run refiners PKN Orlen and Lotos increased their purchases of oil from sources other than Russia.PKN Orlen signed a long-term agreement on regular oil supplies with Saudi…

Tightening Noose: Venezuela's Crisis Deepens

© Anatoly Menzhiliy / Adobe Stock

The news that Venezuela's PDVSA has diverted a crude tanker from Curacao after ConocoPhillips moves to satisfy a $2 billion arbitration award signals that worst may be yet to come. Reuters is reporting that Venezuela's state-run PDVSA ordered a tanker waiting to discharge at its Curacao terminal to divert to Venezuelan waters after ConocoPhillips introduced an order in a Caribbean court to seize its inventories and other assets in the island, according to a shipper and Reuters data on Tuesday.

Sanctions spell the end of OPEC output deal

© Douglas Knight / Adobe Stock

President Donald Trump’s decision to withdraw from the nuclear agreement with Iran marks the end of the current output agreement between OPEC and its allies.OPEC is likely to insist the current agreement remains in effect, at least for now, but the prospective removal of several hundred thousand barrels per day of Iranian exports from the market will require a major adjustment.Saudi Arabia has already promised to "mitigate" the impact of any potential supply shortages, in conjunction with other suppliers and consumer countries…

Maritime Reporter Magazine Cover May 2018 - Marine Propulsion Edition

Maritime Reporter and Engineering News’ first edition was published in New York City in 1883 and became our flagship publication in 1939. It is the world’s largest audited circulation magazine serving the global maritime industry, delivering more insightful editorial and news to more industry decision makers than any other source.

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