Edge's News: Politics and Production Problems Push Oil Prices Higher

Oil prices are gearing up for their largest weekly gain in three weeks after protests across Kazakhstan highlighted the fragility of crude supply. Whilst the immediate impact of riots has been difficult to gauge so far, the uncertainty helped push Brent quotes well above the 80 per barrel mark. 

Considering that Libya is unlikely to resolve its political impasse anytime soon and will most probably see a third of its nominal output shut-in for a prolonged period of time, supply disruptions seem to be firmly on the table currently. With Russian crude production stagnating for a couple of months already, rising crude prices are increasingly reflecting the supply constraints of oil production today. 

The doubling of subsidised LPG prices, a widely used motor fuel in Kazakhstan, to the equivalent of $0.20 per litre, has triggered widespread protests across the Central Asian country, bringing down the government and jeopardising oil production in western regions. 

Oil production at Kazakhstan’s largest 700,000 b/d capacity oil field Tengiz was decreased by its operator Chevron (NYSE:CVX) after some local contractors disrupted train lines in support of anti-government protests. 

Canada’s main oil-producing region, Alberta, is under an extreme cold warning with temperatures dropping as low as -40° C, hampering oil sands production due to malfunctioning equipment and pushing gas prices into an unprecedented spike.  

US major ExxonMobil (NYSE:XOM) reported two new oil discoveries off the coast of Guyana, with both the Fangtooth and Lau Lau exploration wells hitting high-quality sandstone reservoirs, adding to the South American country’s 10 billion barrel reserve tally. 

Only a week after Indonesia’s government introduced a nationwide ban on coal exports amidst a domestic supply emergency, it seems that Jakarta might lift its decision amidst increasing calls from customers across the Asia Pacific region.  

Almost one month after nationwide floods forced Ecuador to halt oil exports, state-owned PetroEcuador restarted loading operations yesterday as 70% of crude production came back on-stream, easing the dearth of heavy Latin American barrels. 

The Iraqi government approved the state’s takeover of ExxonMobil’s (NYSE:XOM) 32.7-percent stake in the 500,000 b/d West Qurna-1 oil field, finalising the departure of the US major from Iraq. 

One of the surprise buyers of US LNG in 2021, Brazil bounced back from a drought-ridden year and has seen above-average rainfall reinvigorate its hydro generation prospects, halting its LNG purchases with only one cargo scheduled thus far on a Brazil-bound voyage this month.

Argentina’s government is pushing forward with deepwater exploration after its authorisation of Equinor’s (NYSE:EQNR) seismic surveying triggered a series of protests in the coastal city of Mal del Plata, supported by regional authorities. 

European aluminium smelters have been operating only slightly above 50% utilisation rates recently as runaway power prices decimate smelting economics, with power accounting for at least one-third of production costs, sending physical premiums to multi-year highs.

According to media reports, at least five Nigerian oil and gas companies are preparing to submit bids for the onshore assets of Anglo-Dutch major Royal Dutch Shell (NYSE:RDS) in a sale assumed to be worth some $3 billion, with stakes in 19 oil mining leases. 

South Korean chemicals firm Lotte Chemical (KRX:011170) plans to build a $4 billion petrochemical complex with a commercial production target of 2025 in Banten, Indonesia, aiming to get a foothold in the country's rapidly increasing petchem sector. 

US energy-focused investment firm Aethon Energy Management is reportedly seeking to sell its Haynesville acreage in North Louisiana and Texas, valued at some $6 billion, boosted by rising natural gas prices. 

Russia’s pipeline gas export monopoly Gazprom (MCX:GAZP) a new four-gas supply deal with the Turkish state energy company BOTAS, hiking the annual supply commitment from the previous 4 bcm per year to 5.75 bcm per year.

Source: Oilprice.com