Bloomberg warns that U.S. gasoline prices are rising and may hit $4 a gallon by May.
Inputs that matter: Vox explains that shortly after the Russian invasion of Ukraine in 2022, the U.S. and E.U. banned imports of Russian oil.
- While the U.S. sanctions had little effect, the E.U. previously purchased 45 percent of Russia's oil exports. Now, it's about 5 percent.
- A shadow fleet is shipping oil for the Russian market to circumvent the U.S. and E.U. sanctions.
- "They tend to be older, they may also be less well maintained, they are run by less experienced crews, and they carry less insurance than they should," Erik Broekhuizen, head of tanker research at Poten & Partners, an oil and gas consulting firm, told Vox.
The opportunity: Vox reports, "A coalition of Western countries, including the E.U., and the G7, implemented a "price cap" that allowed Russian oil sold below $60 a barrel—about $20 below the current market price—to use Western shipping infrastructure and insurance."
- The G7 includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
- It competes with the BRICS nations, which include Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates.
- This move could increase the power of G7 nations over BRICS.
Zoom in: "Russia is committed to the OPEC+ cuts. They are looking beyond the current supply and demand fundamentals and looking at unity with OPEC+." said Phil Flynn, an analyst at Price Futures Group.
- CNBC reports that, according to the Energy Information Administration, U.S. crude stockpiles, which exclude the strategic petroleum reserve, rose by 3.2 million barrels for the week ending March 22.
Between the lines: The Guardian explains, "There can be no new oil and gas infrastructure if the planet is to avoid careering past 1.5C (2.7F) of global heating, above pre-industrial times, the International Energy Agency (IEA) has previously stated."
- "Since the IEA's declaration in 2021, countries and major fossil fuel companies have forged ahead with a glut of new oil and gas activity. At least 20bn barrels of oil equivalent of new oil and gas has been discovered for future drilling since this point, according to the new report by Global Energy Monitor, a San Francisco-based NGO."
Follow the money: "In the near-term, the prospect of continued geopolitical tensions could result in a possible overshoot in prices. We see an upside possibility of $90/bbl to $95/bbl emerging in the near-term," said ICICI Bank in its research report.
- Bloomberg reports that prices above $100/bbl are not unreasonable.
- "However, we assume that an easing in geopolitical tensions will push Brent crude prices lower to the $75 per barrel to $85 per barrel range in H22024," said economists at ICICI Bank.
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Read More
- https://www.bloomberg.com/news/newsletters/2024-03-28/the-100-oil-call-is-back
- https://www.vox.com/world-politics/24113745/russia-shadow-fleet-oil-tankers-environmental-risk
- https://www.theguardian.com/environment/2024/mar/28/oil-and-gas-fossil-fuels-report
- https://carboncredits.com/revving-up-for-the-hydrogen-fuel-cell-era-bmw-and-toyota-lead-the-way-to-zero-emission-vehicles-fhyd/
- https://banananomics.co/oil_prices_are_rising_fast