Crude
oil is a naturally occurring, unrefined petroleum product composed of
hydrocarbon deposits and other organic materials. A type of fossil fuel, crude
oil can be refined to produce usable products such as gasoline, diesel and
various forms of petrochemicals. It is a nonrenewable resource, which means
that it can't be replaced naturally at the rate we consume it and is therefore
a limited resource.. .. … and, interestingly,
crude oil production, demand and supply and its trading are not
necessarily linked to each other !!
Yet
Crude oil is most sought after globally !
In 1973, Egypt and Syria waged a surprise war on Israel, which soon
divided many countries into supporters of either side. Subsequently, several
oil-exporting Arab nations curtailed oil production (known as “the oil
embargo”), quadrupling oil prices within a quarter. This oil crisis was one of
the biggest factors that pushed some oil-consuming, industrialized nations such
as the United States and the United Kingdom into an economic recession that
lasted over a year. The timeline of the
Soviet Union collapse can be traced to Saudi Arabia deciding to stop protecting
oil prices and increasing production fourfold in 1985. The sudden fall in oil
prices was one of the key factors that weakened the Nation.
Oil prices fell in
volatile trade on Tuesday, as a surge in U.S. shale oil output, deteriorating
equity markets and another Trump administration shakeup weighed on futures. U.S. West Texas Intermediate (WTI) crude
futures fell 77 cents, or 1.3 percent, to $60.59 a barrel by 12:15 p.m. ET
(1615 GMT). Brent crude futures were down 24 cents at $64.70 per barrel. U.S. crude production from major shale
formations is expected to rise by 131,000 bpd in April from the previous month
to an all-time high 6.95 million bpd, the U.S. Energy Information
Administration (EIA) said in a monthly report on Monday.
In Ghana, the Bulk
Oil Storage and Transportation limited says it did no wrong in the sale of the
942,000 barrels of crude to BB Energy. It says the quantity is also not 1.8
million barrels as claimed by COPEC. Head
of Fuel Trading at BOST, said the total
crude that came in was 945,000 barrels, and it came in February 2017 and was to
be refined by the Tema Oil Refinery (TOR). TOR however could not refine the
consignment due to operational challenges. A decision was taken in September to
sell the product. At a media briefing in Accra, Mr. Mantey said BOST has a 90
day credit facility and therefore selling the product for cash was prudent and
strategic. It saved the nation and BOST from legal tussle with suppliers. He
said the two dollar discount is standard practice in the oil industry.
Pic credit : www.businessdailyafrica.com/news/
The pending collapse
of Venezuela poses serious short- and long-term challenges for oil markets, but
it also contains a silver lining for the OPEC cartel. Venezuelan oil production
has been in decline for the past decade, but output has plunged rapidly in
recent months as the OPEC member’s political and economic crisis intensifies
bringing state oil company PDVSA to its knees. Venezuela production hit a
three-decade low of 1.6 million barrels a day in January, down 20% from the
same month a year earlier and off a whopping 600,000 barrels a day from its
2016 average of nearly 2.2 million barrels a day.
The country’s
situation will only get worse. Venezuelan production is likely to fall another
400,000 to 600,000 barrels a day this year – and that assumes President Nicolas
Maduro’s beleaguered regime survives. Total collapse of the regime, which the
United States could help bring about by imposing tough new sanctions on
Venezuela’s oil sector, could see output ground to a complete halt. Much hinges
on Venezuela’s presidential elections on May 20. If Maduro uses the election to
further consolidate his grip on power, it could prompt Washington to slap the
harshest of measures on Caracas. These could include an outright ban on imports
of Venezuelan crude, or, more likely, an embargo on U.S. exports of light oil
and refined products to the South American country.
Venezuela’s woes
have been flagged by the International Energy Agency as a major wild card in
oil markets this year that have contributed to the recent firming of crude oil
prices, which are sitting at comfortable $65 a barrel on the international
benchmark. Venezuela’s meltdown comes at a convenient time for OPEC and
provides a convenient hole for U.S. shale growth and keep it from crashing the
market again. The total collapse of
Venezuela could bring about a different set of issues. The ensuing chaos and
confusion could see Venezuelan exports drop to zero while buyers try to assess
who to trust in Caracas. Venezuela’s precarious financial position has already
hampered its oil trade. Courts in the Netherlands Antilles have already
permitted PDVSA creditors to seize two of the company’s oil cargoes in recent
months. President Trump’s administration
wields much power over Caracas because the United States is Venezuela’s largest
crude customer – although U.S. imports of Venezuelan oil have fallen sharply
over the past year due to the OPEC member’s upstream problems and, to a lesser
extent, fears of violating existing sanctions.
Now reads
this interesting news .. .. .. South
American oil-rich nation Venezuela has requested India for an Iran-style
arrangement wherein bilateral trade can be permitted in Indian Rupees instead
of the US Dollar.
Visiting Venezuelan
Foreign Minister Jorge Arreaza said in New Delhi on Monday that Venezuela wants
trade with India in oil and other commodities such as food and medicines to be
conducted in Indian Rupees and not in US Dollars. Venezuela has been facing
economic sanctions imposed by the United States. He said that in his
interaction with senior Indian ministers during his visit, he had kept in mind
that India had granted this facility recently to Iran. “We did seek it (a
similar decision from India regarding Venezuela),” Mr Arreaza told reporters
but pointed out that Venezuela even now trades with China, Russia and Turkey in
currencies other than the US Dollar.
Venezuela wants to
be able to do the same with India as well, said Mr. Arreaza, adding that he is
awaiting a decision on this matter by the Indian Finance Ministry. “If such a
decision is taken, we will open accounts in banks here (in India),” he said. It
may be recalled that New Delhi had recently allowed investment in Indian Rupees
in Iran. Till then, India had allowed this facility only in neighbouring Nepal
and Bhutan.
That augurs
well for the Nation and lot of that keeps happening for the Nation under Sri Narendra Modiji.
With regards – S.
Sampathkumar
13th Mar
2018.
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