Hamas stressed on Saturday that successful indirect ceasefire negotiations depend on four conditions. The Palestinian group said
Israel must stop all hostilities,
2. Withdraw from Gaza,
3. Allow displaced Palestinians to return to their homes,
4. Let humanitarian aid enter the enclave.
Ceasefire talks have made little progress in the months after the previous pause in the conflict in late November 2023. Negotiations are led by mediators such as Qatar and Egypt and were recently described as “stuck.”
Russian Deputy Prime Minister Alexander Novak announced on Friday that Russia will be implementing oil production cuts in the second quarter of 2024 to align with the rest of the OPEC+ member countries. According to Novak, Russia will reduce oil production and exports gradually. In April, production will be reduced by an additional 350,000 barrels per day (bpd) and exports will decrease by 121,000 bpd. In May, production will see a decline of 400,000 bpd with exports cut by 71,000 bpd. By June, production will be reduced by approximately 471,000 bpd. The oil companies will adjust their production levels based on their share of the country’s total oil output. Novak emphasized that these measures aim to ensure a fair contribution from all countries towards the reduction of production and market stabilization.
Novak rules out complete diesel export ban for now
Russian Deputy Prime Minister Alexander Novak (pictured) ruled out the implementation of a complete prohibition on the export of diesel fuel from Russia, stating that the country produces sufficient quantities, Ria reported on Friday. “No, we produce diesel in sufficient volume, twice as much as is required to supply the domestic market, so there is simply nowhere to put it,” he said when asked about the necessity of imposing an export ban on diesel fuel. As a result of market saturation, the aforementioned ban was lifted in late November. In an effort to maintain stability in the domestic market, the Russian government recently imposed a prohibition on the export of gasoline from the country between March 1 and August 31.
Russia has targeted Ukranian energy facilities in an overnight attack with long-range precision weapons, Russia’s Defense Ministry said on Friday. “Last night, the Russian Armed Forces delivered a combined strike by air-launched, seaborne and ground-based long-range precision weapons, including Kinzhal aero-ballistic hypersonic missiles, and also by unmanned aerial vehicles against energy facilities and air defense sites of the Ukrainian army. The goals of the strike were achieved. All the targets were struck,” The ministry said. Ukraine’s largest power provider, DTEK, said that three of its thermal power stations were targeted in the overnight attacks. According to the Ukrainian military, the attack included dozens of missiles and at least 60 explosive drones—all aimed at energy infrastructure. Ukraine said that 84 of 99 missiles were shot down, but the late-night attacks did manage to damage Ukraine’s energy assets in six separate regions, some of which triggered emergency shutdowns. The Russian attacks on Ukraine’s energy infrastructure come after Ukraine stepped up its drone attacks on Russian refineries in recent weeks, reducing Russia’s overall refinery capacity and cutting into Russia’s refinery output, including gasoline and diesel production for its own domestic market. The United States had urged Ukraine to stop its attacks on Russia’s refineries on concerns that any Russian retaliation could result in a spike in crude oil prices. Rising crude oil prices, which lead to higher gasoline prices, are problematic for sitting U.S. presidents in election years. Earlier this week, Russia attacked an underground natural gas storage site in Ukraine, but the attack did not disrupt supply.
Ukrainian power plants damaged by Russian assault
Thermal and hydroelectric power plants in central and western Ukraine were damaged by a Russian overnight assault, Ukrenergo, the country’s electricity transmission system operator reported in a post on Telegram on Friday. “During the combined attack, energy facilities were hit again. Thermal and hydroelectric power plants in the central and western regions were damaged,” the report stated. DTEK Holdings Limited, Ukraine’s largest private energy firm, shared that its equipment was “seriously” damaged in the attack. According to the company’s statement, one engineer was injured. Earlier, Russian forces launched an assault aimed at infrastructure sites near the central Ukrainian city of Dnipro.
U.S. benchmark crude gained over $2 on Thursday as U.S. crude inventories tightened and OPEC+ vowed to keep the output cut status quo as tensions continued to flare in the Middle East and Russia-Ukraine. At 4:23 p.m. ET on Thursday, U.S. crude benchmark West Texas Intermediate (WTI) trading up 2.05% at $83.02, while global benchmark Brent crude was trading up 1.61% at $87.48. WTI has gained 14% so far this year. This week’s inventory data from the Energy Information Administration (EIA) showed a U.S. crude oil stockpile build of 3.2 million barrels, compared to the previous week’s draw of 2 million barrels. In both cases, the data showed a draw in gasoline inventories, helping to support oil prices. That data, released on Wednesday, put downward pressure on oil prices initially. However, after some time to digest the data, which analysts said was a smaller increase than anticipated for this time of year, prices shifted into rally mode. “We … expect U.S. inventories to rise less than normal in reflection of a global oil market in a slight deficit,” Reuters quoted SEB analyst Bjarne Schieldrop as saying. “This will likely hand support to the Brent crude oil price going forward.” Also putting upwards pressure on oil prices is the continued intensification of the Russia-Ukraine conflict, which has focused most recently on energy infrastructure. A Ukrainian drone attack last week on a Russian refinery operated by state-run Rosneft has resulted in a production shutdown after damage to the refinery’s crude processing capacity.
Ukraine has stepped up attacks on oil refineries in Russia in recent weeks, which have reduced Russian refining capacity, and which, reportedly, have the White House concerned about rising international prices. Ukrainian drone attacks on Russian refineries in recent weeks have taken out as much as 600,000 barrels in daily processing capacity in Russia.
On Thursday, JP Morgan suggested that oil prices could rise further, pointing to Russia’s decision to impose additional curbs on production.“ Russia’s actions could push Brent oil price to $90 already in April, reach mid-$90 by May and close to $100 by September,” they wrote in a note, as quoted by Investing.com. OPEC is meeting again next week and expectations are that it will leave its production policy unchanged.
Russian warships from the Pacific Fleet have crossed the Bab-el-Mandeb Strait and entered the Red Sea, the state-run Tass news agency said, venturing into a maritime region plagued by Houthi attacks and crowded with naval vessels. The detachment included the missile cruiser Varyag and frigate Marshal Shaposhnikov, Tass reported Thursday, citing the Russian Pacific Fleet’s press service, which said the ships were carrying out “assigned tasks within the framework of the long-range sea campaign.” The ultimate destination of the ships was unclear from the report, as was the reason Russia sent vessels to the area.
For months, the Yemen-based Houthis have carried out a series of attacks on vessels in the Red Sea in retaliation for Israel’s military actions in Gaza, forcing many ships to redirect their journeys. The group told China and Russia earlier this month that their ships can sail through the Red Sea and Gulf of Aden without being attacked. In exchange, the two countries may provide political support to the Houthis in bodies such as the United Nations Security Council, according to several people with knowledge of the militant group’s discussions.
Source: Bloomberg
The Houthis, an Islamist group, say they’re targeting ships linked to Israel, the US and UK. Yet, they appear to have mis-identified some vessels. Missiles exploded near a ship hauling Russian oil near Yemen in late January. It happened days after a spokesman for the Houthis told a Russian newspaper that Russian and Chinese merchant ships needn’t fear attacks. The Houthis also fired a missile at Chinese-owned oil tanker Huang Pu on Saturday, US Central Command said, highlighting continued risks to shipping in the seas off Yemen despite the agreement. Since the attacks started, most Western shipping firms have avoided the strait and are instead going around southern Africa. However, US and UK warships in the Red Sea have been hitting Houthi targets in Yemen for weeks in an attempt to deter the militant group from attacks on merchant vessels, while Iran, which supports the Houthis, has a spy ship just outside the Red Sea. A French ship is also nearby. Earlier this month, Iran, Russia and China held joint naval exercises in the Indian Ocean, according to Russia’s Defense Ministry. Both the Varyag and Marshal Shaposhnikov took part in the drills, which Russia said were meant to practice “safety in maritime economic activities,” including liberating ships hijacked by pirates. Russia has also sought a naval base on the Red Sea in Sudan, though a civil conflict in that country may put back those plans. NN: Everyone is coming to the party.
A refinery in southwestern Russia owned and operated by state oil giant Rosneft has been taken offline and all production stopped, due to damage following a drone attack from Ukraine last week, Reuters reported on Thursday, quoting sources in the industry. Rosneft’s Kuibyshev oil refinery in the region of Samara on the Volga River was hit by a drone attack this weekend and had already halted half of its crude processing capacity after one of the two primary crude refining units at the facility caught fire. Ukraine has stepped up attacks on oil refineries in Russia in recent weeks, which have reduced Russian refining capacity, and which, reportedly, have the White House concerned about rising international prices. The United States has repeatedly urged Ukraine to halt its drone attacks on Russian oil refineries due to Washington’s assessment that the strikes could lead to Russian retaliation and push up global oil prices, the Financial Times reported last week, citing sources familiar with the exchange. Ukrainian drone attacks on Russian refineries in recent weeks have taken out as much as 600,000 barrels in daily processing capacity in Russia, according to commodity trading major Gunvor. “It is significant because obviously this is gonna hit the distillate exports straight away,” Gunvor chief executive Torbjörn Törnqvist told Bloomberg on the sidelines of the CERAWeek conference in Houston last week. “So that will probably take down exports by a couple of hundred thousand barrels, so to me, it’s a distillate problem,” the executive added.
According to Reuters estimates, the amount of Russian oil refining capacity that has been taken offline due to Ukrainian drone strikes is 14% of Russia’s total refining capacity.
Calculations show that 900,000 barrels per day of refining capacity have been taken offline by drone strikes, Reuters reported on Tuesday. This includes Lukoil’s Norsi and Volgograd refineries, and Rosneft’s Kuibyshev and Ryazan refineries, among others.
The latest crude oil purchase that the Department of Energy made as part of refill plans for the strategic petroleum reserve cost an average of over $81 per barrel, exceeding the $79 ceiling set by the federal government. Per an Argus report, the DoE declined to comment on why it had bought the oil despite the higher price hinting at more news to come later today. Back in 2022, to arrest an inexorable climb in retail fuel prices, the White House announced a release of 180 million barrels of crude oil from the strategic petroleum reserve. Critics warned the move would have a limited effect on prices but compromise the energy security of the country by reducing the level of crude in the SPR. The final amount of oil released from the SPR ended up exceeding 180 million barrels with the DoE pledging to replenish the reserve in a timely fashion but only when prices were favorable. The SPR is currently close to a 40-year low as a result of the massive release. The replenishing effort has been going on slowly, with three million barrels bought there and another three bought here as the very news of a planned purchase led to an uptick in prices. This forced the department to update the price range, at which it would be buying, raising the top end from $72 per barrel last year to $79 per barrel. Yet oil prices have been on a climb recently and WTI broke the $80-yer-barrel threshold earlier this month. As of March 22, the SPR stood at 363 million barrels of crude, Argus reported, citing Energy Secretary Jennifer Granholm as saying that it should be back to normal by the end of the year. This, however, will not be a result of the replenishment effort but of the cancellation of 140 million barrels in previously planned SPR sales for the period to 2031. NN: Typical government deal sell the oil at $70 buy it back over $83.
Traders seem to have finally realized that OPEC+ is serious about keeping crude oil supply constrained.
Kemp: traders are buying oil at the fastest rate since 2020.
According to the Reuters numbers, in the week ending March 19, traders bought the equivalent of 140 million barrels across the six most traded crude and fuel contracts.
After months of skepticism, traders seem to have finally realized that OPEC+ is serious about keeping crude oil supply constrained. Per the latest weekly data from Reuters, as reported by market analyst John Kemp, traders are buying oil at the fastest rate since 2020. And oil prices are on the rise. Of course, OPEC is not the only factor behind the change in sentiment among traders. Refinery disruptions in Russia resulting from Ukrainian drone attacks have also had a lot to do with the growing bullishness on oil markets. Recent reports that the U.S. had urged the Ukrainians to stop targeting Russian refineries and the Ukrainians’ refusal to do so probably reinforced the effect, too. There is also the improvement in analysts’ outlooks for the global economy. The picture seems to no longer be as bleak as it was last year, so oil demand projections are improving. A month ago, the International Monetary Fund revised upwards its forecast for the global economy, and so did S&P Global Market Intelligence. So traders are once again buying oil in significant volumes.
According to the Reuters numbers, in the week ending March 19, traders bought the equivalent of 140 million barrels across the six most traded crude and fuel contracts. Crude was the most bought, with 57 million barrels in West Texas Intermediate changing hands during that week along with 55 million barrels of Brent crude. “Escalating geopolitical tension, coupled with a rise in attacks on energy facilities in Russia and Ukraine, alongside receding ceasefire hopes in the Middle East, raised concern over global oil supply,” Nissan Securities analyst Hiroyuki Kikukawa told Reuters in comments on the latest movements in prices.Yet while geopolitical factors play a big role in day-to-day price swings, the OPEC+ cuts normally have a longer-term effect—once it kicks in, and this time, it took a while.Saudi Arabia first announced in July that it would reduce the amount of oil it supplies to global markets. Some saw it as insignificant, while others dismissed it as a desperate attempt to prop up the unproppable as prices remained stubbornly stuck within a narrow range below $80 per barrel. Yet later, the rest of OPEC and its Russia-led partners also joined the Saudis—and prices still remained locked in their range. The factors that kept them there were the same that are now fueling the rally: a pessimistic outlook for the global economy, geopolitical tensions that weren’t affecting oil supply, and general skepticism about demand in the era of the energy transition. The tide only began to turn this year as the outlook for global GDP began to change, with the first data about 2023 starting to come in. In some places, things were as bad as they seemed, such as the eurozone. In other parts of the world, however, such as the United States, the economy performed better than most expected, sparking hope that this year could be better still. And that shifted traders’ attention from demand to supply. There had been warnings about shrinking oil inventories amid the OPEC+ cuts but those got little attention until the change in economic outlook. Now, there’s suddenly concern about a deficit that even the IEA acknowledged, after a month ago confidently stating that the oil market was comfortably supplied.So now prices are on the rise again and Morgan Stanley has already forecast that Brent will hit $90 per barrel later in the year. “Every month that OPEC discipline remains in-place, Brent flat price will likely continue to catch up with where inventories and time spreads already are,” the bank said. It’s safe to say that OPEC discipline will remain in place for quite a while yet. NN: a golden cross is a rare event. It attracts Al LOT of technical traders
Hamas political deputy chief Khalil al-Yahya stated on Thursday that he holds a pessimistic view regarding the potential for a ceasefire agreement in the near future, claiming that Israeli Prime Minister Benjamin Netanyahu intends to prolong the military “onslaught” in the Gaza Strip.During an interview with Iranian Press TV in Tehran, al-Yahya stressed that the military group is “ready” to show “the greatest level of flexibility” for the sake of the Palestinian people and resume negotiations on a potential ceasefire deal in the enclave. “If the talks are the way to end the war, we are ready,” the group’s political deputy chief underlined.Earlier today, a unanimous source from the Palestinian military group told the Al-Araby Al-Jadeed that Hamas has begun preparing for Israeli ground operation in Gaza’s southernmost city of Rafah.
(Bloomberg) — US Vice President Kamala Harris warned Israel against a major attack on the Gazan city of Rafah, where more than a million Palestinians have sought refuge as the war against Hamas continues. While broadly in line with the Biden administration’s repeated cautions to Israel, Harris’ comments on Sunday went beyond remarks by Secretary of State Antony Blinken during his trip to the region last week.“I am ruling out nothing,” Harris said to ABC when asked whether there would be consequences for Israel for a military assault on Rafah, which borders Egypt. “We have been clear in multiple conversations and in every way that any major military operation in Rafah would be a huge mistake.”
Israel says it must send troops into Rafah because it’s the last bastion of Hamas, an Iran-backed Islamist organization. Israeli intelligence estimates there are around 5,000 to 8,000 Hamas fighters and group leaders in the city, Bloomberg has reported.
Israel Says It Will Invade Rafah No Matter What the US Says
A top Israeli official said his country’s military is ultimately going to invade the southern Gaza city of Rafah and defeat Hamas “even if the entire world turns on Israel, including the United States.” “We are going to go in and finish this job, and anybody who doesn’t understand that doesn’t understand that the existential nerve of the Jews was touched” by the Oct. 7 attack when Hamas operatives killed 1,200 and abducted 250, Israeli Strategic Affairs Minister Ron Dermer said on a US podcast posted online Thursday. A close confidant of Prime Minister Benjamin Netanyahu, Dermer is headed to Washington early next week to listen to concerns from the Biden administration that such an invasion would cause many more civilian casualties at a time when famine and disease are spreading in Gaza.US Secretary of State Antony Blinken is in the region pushing for a deal between Israel and Hamas that would lead to a six-week cease-fire and an exchange of hostages for Palestinian prisoners along with a big increase in humanitarian aid to the more than 2 million Palestinians in the coastal strip.
“We’ve been very clear — President Biden’s been very clear — that a major ground operation in Rafah would be a mistake, something we can’t support,” Blinken told reporters in Cairo Thursday evening after meeting with Arab foreign ministers. “There is no place for the many civilians who are massed in Rafah to go to get out of harm’s way, and for those that inevitably remain, it would be a humanitarian disaster.”
