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Russian billionaire Roman Abramovich has lost a legal challenge aimed at overturning European Union sanctions imposed on him in the wake of Russia’s invasion of Ukraine.

Abramovich had filed a lawsuit at the EU’s general court against the European Union Council, which imposed punitive sanctions on the 57-year-old in 2022 as part of measures targeting Russia and President Vladimir Putin’s close allies after Russia invaded Ukraine.

The court in Brussels rejected the challenge and also dismissed his claims for compensation, noting his role in the Russian steel company Evraz and the fact that steel provided a major source of revenue to the Russian government.

“The General Court dismisses the action brought by Mr Abramovich, thereby upholding the restrictive measures taken against him,” it said in its ruling on Wednesday.

“The [European] Council did not in fact err in its assessment by deciding to include, then maintain, Mr Abramovich’s name on the lists at issue, in the light of his role in the Evraz group and, in particular, its parent company,” it added, referring to the sanctions lists.

Abramovich, who also holds Israeli citizenship and is a former owner of Premier League football club Chelsea, became one of the world’s most powerful businessmen after the 1991 break-up of the Soviet Union. Forbes estimates his net worth at $9.2bn.

In a statement issued on his behalf, Abramovich said he was disappointed by the ruling, which he can appeal.

He said the court had not considered some of the arguments used by the EU Council, including the proposition that Abramovich had benefitted from the Russian government – which he said was a false suggestion.

“Mr Abramovich does not have the ability to influence the decision-making of any government, including Russia, and has in no way benefited from the [Ukraine] war,” the statement said.

“The court’s decision to maintain the sanctions against Mr Abramovich was based purely on the court defining Mr Abramovich as a ‘Russian businessman’ which under today’s very broad EU regulations is sufficient to remain sanctioned, even if you are just a passive shareholder in a business sector with no connection to the war.”

The businessman has also been punished in the United Kingdom and had his assets frozen in response to Russia’s invasion of Ukraine.

Abramovich was forced to sell Chelsea after being sanctioned by the British government for what it called his enabling of Putin’s “brutal and barbaric invasion” of Ukraine. The sale of the Premier League club for 2.5 billion pounds ($3.2bn) — then the highest price ever paid for a sports team — was completed by a consortium fronted by Los Angeles Dodgers part-owner Todd Boehly.

It marked the end of the trophy-filled, 19-year tenure of Abramovich.

The EU has imposed 12 rounds of sanctions on Russia since Putin ordered his troops into Ukraine almost two years ago. The measures have targeted the energy sector, banks, companies and markets, and made more than 1,000 Russian officials subject to asset freezes and travel bans.

The EU imposed punishment on the businessman in 2022 as part of measures targeting Russia and Putin’s close allies.

Source: Oilprice.com

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The bombing of a Jewish community centre killed 85 people, and Hezbollah has been accused of other attacks in Argentina.

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As part of the agreement, US President Joe Biden agreed to grant clemency to Alex Saab, an ally of Nicolas Maduro.

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Russia has increased significantly its crude oil exports to China and India this year, with volumes to China hitting 100 million tons annually, or around 2 million barrels per day, Nikolay Tokarev, the head of Russian oil pipeline monopoly Transneft, told Russian media on Wednesday.

“Export volumes to China and India have increased significantly; many times over. I can say that about 70 million tonnes of oil were supplied to India this year, while about 100 million tonnes of oil went to China,” Russian news agency Interfax quoted Tokarev as saying in an interview with state television Rossiya 24.

According to the Transneft executive, Russia sent crude to new markets this year.

“New markets have appeared: Egypt, Morocco, Myanmar, Pakistan. I can list many more,” Tokarev said.

China and India have become the key export outlets for Russia’s oil this year after the EU embargo on Russian crude and products and the G7-led price caps, above which Western insurers and financiers are prohibited from offering services for the shipment of Russian oil. Both China and India saw their respective imports of crude from Russia hit a record high at some point in 2023.

In November, Russia remained China’s top crude supplier, with Beijing importing around 2.2 million bpd of Russian oil last month, per Chinese customs data cited by Reuters.

Between January and November, China’s imports of Russian crude oil jumped by 22.2% compared to the same period of 2022, according to the data.

India has also become a top buyer of Russian crude oil alongside China since the Russian invasion of Ukraine and the embargoes and price cap the EU, the U.S., and the G7 imposed on Moscow in an attempt to stifle Putin’s oil revenues.

Indian imports of Russian crude hit a four-month high last month, at 1.6 million bpd, according to data Reuters has obtained from trade sources. The November imports were 3.1% higher than India’s intake of Russian crude in October and accounted for more than a third of all Indian crude oil imports last month.

Source: Oilprice.com

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Increased distillate production and slowing economic activities have led to rising diesel stocks and falling prices.
Weak manufacturing activity in the U.S. and Europe contributes to reduced diesel demand, easing the market.
Geopolitical tensions near the Red Sea present potential disruptions, threatening to impact diesel supply chains and market stability.

Diesel and other distillate inventories are higher now than they were this time last year, suggesting that a tight global diesel market has started to ease, in part due to slowing construction and manufacturing activity in the United States and major European economies.

Refiners produced high levels of distillate volumes in the third quarter of 2023, adding to stockpiles, while the economic slowdown is weighing on diesel consumption.

U.S. diesel prices have dropped in recent weeks and are now at their lowest since July—welcome news for the Fed’s continuing fight against inflation as the prices of goods are closely linked with the price of diesel.

While the previous diesel tightness is showing signs of easing, manufacturing and construction activity going forward could determine how the supply-demand balance in distillate markets will look.

Relentlessly rising interest rates have slowed construction activity and factory output globally, but the recent Fed pivot signaling three rate cuts next year could reinvigorate the U.S. economy after a “soft landing” and a rise in manufacturing could lead to renewed tightness in distillate markets.

U.S. distillate fuel inventories increased by 1.5 million barrels in the week ending December 8, 2023, but are about 12% below the five-year average for this time of year, the latest weekly inventory report from the Energy Information Administration (EIA) showed.

Below-average distillate stocks suggest that an uptick in manufacturing and construction next year could cause another concern about a tight diesel market.

For now, the diesel crunch is easing.

But the geopolitical risk near the Red Sea, which prompted major shippers to seek alternative routes, could increase the voyage length for shipments of petroleum products from the Middle East and India to Europe and from Russia to China and India, creating chaos on the oil and product markets.

Diesel Stocks Rise

Globally, stocks have risen over the past year and have narrowed the deficit to ten-year seasonal averages, according to estimates by Reuters senior market analyst John Kemp.

Distillate stocks in the U.S., Europe, and Singapore either increased or tracked seasonal averages between September and November after narrowing in August the deficit to ten-year averages compared to August 2022, Kemp notes.

However, as diesel consumption is the most sensitive of all the refined products to economic growth and the business cycle, weak manufacturing is easing the diesel crunch.

The price of diesel has just fallen below $4 per gallon for the first time since July, Patrick De Haan, head of petroleum analysis at GasBuddy, wrote on Monday, noting that it is “also very welcome news for the economy as nearly all goods are impacted by the price of diesel.”

Weak Manufacturing 

Still, part of the diesel price decline—apart from lower crude oil price, of course—is continued weakness in manufacturing activity.

U.S. economic activity in the manufacturing sector contracted in November for the 13th consecutive month, according to the latest release from the Institute for Supply Management (ISM).

The Manufacturing PMI registered 46.7% in November, unchanged from the 46.7% recorded in October.

“The overall economy continued in contraction for a second month after one month of weak expansion preceded by nine months of contraction and a 30-month period of expansion before that,” said Timothy R. Fiore, Chair of the Institute for Supply Management Manufacturing Business Survey Committee.

However, ISM’s December 2023 Semiannual Economic Forecast from last week is bullish in many ways, with positive expectations about manufacturing in 2024. Importantly, the more bullish responses and data for the manufacturing sector were collected before the Fed’s signal that rate cuts are coming next year.

Weak Europe

But economic prospects for Europe, especially for its largest economy, Germany, do not look so good.

Real gross domestic product (GDP) in Germany is likely to decline again slightly in the fourth quarter of 2023 due to weak demand in industry and construction, Bundesbank, the central bank, said in its monthly report on Monday.

If Q4 GDP falls after the drop in Q3, it would mean a technical recession for Europe’s biggest economy.

Business sentiment is also weakening, the Ifo data showed on Monday.

“In manufacturing, the Business Climate Index fell noticeably. Companies assessed their current business situation as significantly worse. Their expectations also grew more pessimistic. Energy-intensive industries are having a particularly tough time,” the ifo Institute said, commenting on Germany’s flailing business confidence.

Oil Flows Change As Shippers Avoid Red Sea Route

The flows of crude and refined products could change in the coming weeks as some of the largest companies in the oil and shipping industries have started to adjust operations to avoid transit through the Red Sea following daily attacks on commercial vessels near the Yemeni coast.

Since the EU embargo on Russian oil and products, volumes of diesel and crude oil sailing northbound in the Red Sea have jumped, which has boosted the importance of flows via the Red Sea, Jay Maroo, Head of Market Intelligence & Analysis (MENA) at Vortexa, said on Monday.

If vessels moved to alternative waypoints such as the Cape of Good Hope in Africa, the voyage duration on the main routes from the Middle East to Europe, from India to Europe, and from Russia to India and China would increase by between 58% and 129%, according to Vortexa. The biggest increase, 129%, in the time it takes for a cargo to arrive at its destination would be on the Middle East Gulf to Mediterranean route, which would take 39 days instead of 17 days, Vortexa says.    .

Source: Oilprice.com

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OPEC+ faces record-breaking U.S. oil production and rising supply from other non-OPEC+ producers, including Brazil, Guyana, Canada, and Norway.
Barring a major geopolitical escalation resulting in a large supply outage, oil prices are unlikely to reach $100 a barrel in 2024.
Paul Sankey: Record-high U.S. oil production is a “huge problem” for OPEC+.

Surging non-OPEC+ oil production and significant storage space held by the OPEC+ group will continue to put downward pressure on crude oil prices next year, analysts say.

Barring a major geopolitical escalation resulting in a large supply outage—which cannot be discounted—, oil prices are unlikely to reach $100 a barrel in 2024 as American oil production and exports are rising faster and higher than expected, and market sentiment about demand is downbeat, especially for the first half of 2024.

With its latest announced cuts for the first quarter of 2024, the OPEC+ alliance is trying to keep tight control over the global oil supply. But the group faces record-breaking U.S. oil production and rising supply from other non-OPEC+ producers, including Brazil, Guyana, Canada, and Norway. Brazil has been invited to be part of OPEC+ starting in January 2024, but it has already said that it would not take part in any production cuts.

OPEC+ is trying to keep a floor under oil prices (at the expense of its market share), but it may not succeed in propping up prices too much. This is especially true if the group fails to extend the cuts beyond March 2024, analysts say.

The group’s production cuts “help defend a floor in oil prices, but more cuts equate to more spare capacity,” Stacey Morris, head of energy research with VettaFi, told MarketWatch.

“That dynamic arguably puts a lid on the upside for oil prices,” Morris added.

Warren Patterson, Head of Commodities strategy at ING, wrote in a note earlier this month that “given the scale of cuts we are seeing, OPEC is sitting on a substantial amount of spare capacity.”

OPEC, including Iran, has some 5.5 million barrels per day (bpd) of spare capacity, according to ING.

“This spare capacity should also offer some comfort to markets given that should we see significant price strength, one would expect this capacity to start to return to the market,” Patterson said.

At any rate, the oil market management from OPEC+ would be key to where prices will go next year, he noted.

ING sees Brent Crude trading in the low $80s early next year, while it forecasts Brent to average $91 per barrel over the second half of 2024, when the market will return to deficit.

However, non-OPEC+ supply is growing at a faster pace than previously forecast, led by record U.S. crude oil production, which continued to soar despite a flat or falling rig count compared to this time last year.

The United States is “now the global swing producer, not Saudi Arabia, and especially not Russia,” Robert Yawger, executive director for energy futures at Mizuho Securities USA, told MarketWatch’s Myra Saefong.

The United States is now on track to deliver a supply increase of 1.4 million bpd 2023, accounting for two-thirds of the 2.2 4 million bpd non-OPEC+ production growth this year, the International Energy Agency (IEA) said in its monthly report this week.

At the same time, OPEC+ production is set for a 400,000 bpd decline, which would reduce its market share to 51% in 2023 – the lowest since the bloc’s creation in 2016, the agency added.

Record-high U.S. oil production is a “huge problem” for OPEC+, Paul Sankey at Sankey Research told CNBC after the latest OPEC+ meeting at the end of November.

The solution for Saudi Arabia could be to just flush the soaring non-OPEC+ output out by flooding the market with crude and thus sinking oil prices to levels below the U.S. profitability threshold, Sankey said.

If OPEC+ were to unwind the cuts after March 2024, oil prices could crash by 30%-50% if most of the spare capacity comes online, Citigroup’s global head of commodities research, Max Layton, told Bloomberg TV this week.

“They can balance this market and keep these prices at $70 to $80 if they all work together,” Layton said.

If OPEC+ producers continue to work together and not choose to flood the market with oil to flush out the U.S. competition eating into their market share, they may have to continue a tight control on supply for the next few years, according to Rapidan Energy Group.

“For the next several years, at least, continually unified, vigilant, and effective OPEC+ supply management will be required to prevent a collapse in oil prices,” Rapidan said in a report this week carried by Bloomberg.

“While oil demand isn’t about to peak, neither is non-OPEC+ supply growth,”

Bob McNally, Rapidan’s founder and a former White House official, said.

“So OPEC+ has its work cut out for it over the next few years. But toward the end of the decade, a price boom will follow the bust. Buckle up.”

Source: Oilprice.com

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Australian LNG player Woodside has signed a non-binding memorandum of understanding with four Japanese companies to enable studies of a potential carbon capture and storage (CCS) value chain between Japan and Australia.

Under the MoU, Woodside with Sumitomo Corporation, JFE Steel Corporation, Sumitomo Osaka Cement, and K Line will study the capture, storage and transportation of CO2 emissions from the Setouchi and Shikoku regions of Japan and the injection and storage of the CO2 at Australian storage sites.

According to Woodside, the memorandum reflects the demand for large-scale decarbonization solutions and highlights the unique geological advantages of Australia with subsurface characteristics that are highly suitable for large-scale CCS projects.

In September, Woodside signed a similar deal with Japan’s Kansai Electric Power as well as with Sumitomo, Toho Gas, and K Line.

Woodside and compatriot LNG player Santos recently confirmed that the two firms are in discussions regarding a potential merger.

The combination of the two firms would create a merged energy and LNG giant with a market value of about A$80 billion ($52.4 billion).

Speaking of Santos, the firm also signed this week a memorandum of understanding with Japan’s JX Nippon Oil & Gas Exploration Corporation (JX) and ENEOS.

Santos said it plans to expand the Moomba carbon capture and storage (CCS) project and transform the Cooper Basin into a “decarbonization and low-carbon fuels hub”.

The MoU seeks to jointly identify and define commercial and investment opportunities covering the potential importation of up to 5 Mtpa of CO2 by 2030, 10 Mtpa by 2035 and 20 Mtpa by 2040 from Japan to the Moomba CCS project, via either Port Bonython in South Australia or Gladstone in Queensland, it said.

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Japan’s liquefied natural gas (LNG) imports dropped in November compared to the same month last year, according to the provisional data released by the country’s Ministry of Finance.

The country’s LNG imports decreased by 3.9 percent year-on-year in November to 5.33 million tonnes, the data shows.

LNG imports dropped compared to 5.41 million tonnes in the previous month, which marked an increase compared to the previous year.

Japan’s coal imports for power generation decreased in November compared to the last year.

Coal imports were down by 2.4 percent to 8.31 million tonnes, and Japan paid about $1.55 billion for these imports, a drop of 55.6 percent compared to the last year, the data shows.

According to the preliminary data, the November LNG import bill of about $3.44 billion decreased by 34.1 percent compared to the same month last year.

State-run Japan Oil, Gas and Metals National Corp (JOGMEC) did not publish both the contract-based and the arrival-based monthly spot LNG price in November as there were less than two companies that imported spot LNG.

The average price of spot LNG cargoes for delivery to Japan contracted in October 2023 and scheduled to be delivered from the month onward was $14.7/MMBtu, JOGMEC previously said.

Also, the average price of spot LNG cargoes that were delivered in Japan within the month of October regardless of the month when the contract was made (arrival-based price) was $13.8/MMBtu.

JOGMEC also said in a report this week that the “Northeast Asian assessed spot LNG price JKM for the previous week (December 11 – December 15) fell to high $11s on December 13 due to ample supply and lower demand from high $14s the previous week.”

“JKM then rose to low $12s on December 15 reflecting improving buying interest due to the daily price declines,” it said.

METI announced on December 13 that Japan’s LNG inventories for power generation as of December 10 stood at 2.54 million tons, up 0.35 million tonnes from the previous week.

As per LNG shipments going to Japan in November, deliveries from Asia decreased by 28.9 percent to 1.15 million tonnes, the ministry’s data shows.

Middle East LNG shipments increased by 59.5 percent to 767,000 tonnes in November.

Moreover, shipments from Russia rose by 46.9 percent to 655,000 tonnes, while US deliveries jumped by 132.2 percent to 445,000 tonnes in November.

The data does not include spot volumes.

Japan was the world’s top LNG importer in 2022, overtaking China, but both of the countries took fewer volumes compared to the year before.

However, China has overtaken Japan to become the world’s top importer of LNG this year.

China’s LNG imports rose for the second month in a row in November to 6.80 million tonnes. The country imported 62.99 million tonnes of LNG during January-November, up by 10.9 percent compared to the same period last year.

During the January-November period, Japan imported some 59.85 million tonnes, down by about 3.14 million tonnes compared to China’s volumes.

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More than 2,200 workers are entering the third day of their sit-in 500 meters below the surface

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Brussels will allow Slovakia to export fuel produced from sanctioned crude to the Czech Republic for another year

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