US seizes another Iranian oil cargo

Market: Crude oil
03/02/21

The US Department of Justice has asked a US court to authorize forfeiture of a 2mn bl Iranian oil cargo, the first such action under President Joe Biden's administration.

The Liberian-flagged Achilleas allegedly carried out a ship-to-ship transfer in October 2020 in the Gulf of Oman, near the UAE port of Fujairah, according to a forfeiture complaint filed by US federal attorneys at the US District Court for the District of Columbia. Washington claims jurisdiction over the cargo by stating that the ultimate beneficiary of all Iranian oil exports is Iran's Islamic Revolutionary Guard Corps (IRGC) that the US labels a "terrorist organization." The alleged link allows US prosecutors to tap counter-terrorism authorities in pursuit of Iranian cargoes.

The Achilleas is currently off the Brazilian coast and pointed toward the US Gulf of Mexico, having departed the Gulf of Oman in late December. The tanker allegedly was chartered by Fujairah International Oil and Gas to carry a cargo of "Basrah light crude oil" to China using a fraudulent bill of lading, according to the US attorneys. The US attorneys did not disclose how they came into possession of the cargo.

The transfer of the cargo to the US for sale is the second successful instance of US seizure of an Iranian cargo. The Justice Department last year sold the 1.16mn bl of Iranian-sourced fuel confiscated in August 2020 aboard four tankers that allegedly were delivering it to Venezuela. Two prior attempts in 2019 and 2020 failed to secure Iranian tankers at Gibraltar and the UAE.

The use of counter-terrorism legal authorities by Washington will present a challenge as Biden's administration is trying to revive the Iran nuclear deal. The international agreement promised Iran to lift all sanctions against its oil sector in exchange for Tehran's compliance with restrictions on its nuclear program. But former president Donald Trump's administration imposed additional sanctions under the counter-terrorism umbrella, which need to be either waived or revoked if Iran is to receive full sanctions relief.

Biden's administration, which has promised to begin outreach to Tehran to restore the nuclear deal, has yet to do so two weeks into its tenure. Neither secretary of state Tony Blinken nor special Iran envoy Rob Malley has spoken with Iranian officials yet, according to the State Department.

Tehran says that the US must provide sanctions relief before Iran resumes compliance, pointing out that the deal stopped functioning after a unilateral US withdrawal in 2018. Iranian foreign minister Mohammad Javad Zarif said yesterday the US and Iran could take concurrent steps to resume their participation.

But Washington for now says no. "There are many steps in that process: consulting with our allies, consulting with our partners, consulting with Congress before we are reaching the point where we are going to engage directly with the Iranians and willing to entertain any sort of proposals," the State Department said yesterday.

Chain of sales

Senior US officials still say that the policy of maximum sanctions pressure against Iran is not working well and that they need to move fast before Iran takes irreversible steps to advance its nuclear program. "A critical early priority has to be to deal with what is a escalating nuclear crisis as they move closer and closer to having enough material for a weapon," White House national security adviser Jake Sullivan said last week.

Washington-based sanctions experts point out that Iran's oil exports have rebounded last year as Tehran has found ways to bypass US sanctions through ship-to-ship transfers and use of front companies.

US court documents dealing with Iranian cargoes back that view, alleging that Tehran has managed to make use of facilities at Fujairah and other Mideast Gulf ports to export cargoes. China's imports of Iranian crude averaged 78,000 b/d in 2020, based on Beijing's customs data.

The cargo aboard the Achilleas was transferred from ship to ship three times since being loaded into the Iran-flagged Sarak and Sonia I at the Sirri Island oil terminal in Iran in May 2020, according to court documents. The cargoes were then transferred to the Cook Islands-flagged Lubov — also known as the Ethan — and then to Panamanian-flagged Trident Liberty, before being loaded into the Achilleas.

By Haik Gugarats

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23/12/24

Viewpoint: Europe’s refiners eye support from closures

London, 23 December (Argus) — Another tranche of European refining capacity will close for good next year, but the reprieve for margins in the region may only be temporary. Nearly 400,000 b/d of capacity, around 3pc of Europe's total, is scheduled for permanent closure in 2025, comprising Petroineos' 150,000 b/d Grangemouth refinery in Scotland, Shell's 147,000 b/d Wesseling refinery in Germany and a third of the capacity at BP's nearby 257,000 b/d Gelsenkirchen refinery . Around 30 refineries have closed in Europe since 2000. Among the most recent was Italian firm Eni's 84,000 b/d Livorno refinery in northern Italy earlier this year. And only this month, trading firm Gunvor announced it is mothballing its small upgrading refinery in Rotterdam . The Rotterdam facility had already stopped processing crude in 2020, leaving it peculiarly exposed to the margins between intermediate feedstocks and finished fuels. The refinery has been hit by a 25pc increase in operating costs in the last four years and a squeeze on margins, the latter the result of competition from new refineries outside the region, Gunvor said. Outside Europe, the world has added more than 2.5mn b/d of crude distillation capacity in the last three years. Three brand new refineries have come on stream in the Middle East in that time — Saudi Arabia's 400,000 b/d Jizan, Kuwait's 615,000 b/d Al-Zour with Oman's 230,000 b/d Duqm refineries. More recently, Nigeria's 650,000 b/d Dangote refinery, Mexico's 340,000 b/d Olmeca refinery and Yulong Petrochemical's 400,000 b/d refinery in China's Shandong province started up, all of which are likely to ramp up throughput in 2025. Refinery closures tend to support margins for those that remain. But European refiners' costs continue to rise while demand for their products falls, which means next year's closures are unlikely to be the last. Simpler and smaller refineries are prime candidates for closure as they usually achieve weaker margins. Europe also has plenty of refineries built before 1950 that are still running. These older plants can be more at risk of accidents and breakdowns. And repairs can sometimes cost so much that they tip a refinery into the red. An ongoing concern for European refiners is the trend towards lighter and sweeter crude slates , driven by supply-side dynamics, which is resulting in higher naphtha yields at a time when demand for naphtha from Europe's petrochemical sector is under pressure from a contraction in cracking capacity. But many in the market expect the greatest pressure in 2025 will fall on those coastal refineries in Europe that were built to maximise gasoline output. If, as expected, Dangote continues to shrink Nigeria's demand for gasoline imports , these refineries will be hit hardest. Any refinery that cannot desulphurise all of its gasoline output to the 10ppm required for UK or EU usage will be under intense pressure, as west Africa is presently among the only outlets for European high-sulphur gasoline. Strike support One of the strongest supports for European refining margins in 2025 could come in the form of industrial action if new capacity cuts or closures were to be announced. Refinery workers in the region have shown willing and able in the past to organise large-scale strikes, most emphatically in France. The highest diesel refining margins Argus has ever recorded came in October 2022, when the entire French refining system was shut down by strikes. Another trend to watch out for next year is the continuing shift in the ownership structure of Europe's refining sector. The large integrated oil companies that have dominated the industry for so long have been steadily selling European refining assets to independents and trading firms. The latter are nimbler and able to cut costs more ruthlessly. And with many of them not publicly listed, they are less susceptible to pressure regarding their environmental footprints. There could be more instalments in this story in 2025. Sweden's Preem started accepting bids for its Swedish refining assets in the summer of 2024 and Russia's Lukoil is considering bids for its Burgas refinery in Bulgaria. By Benedict George Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US House votes to avert government shutdown

20/12/24

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20/12/24

US House votes to avert government shutdown

Washington, 20 December (Argus) — The US House of Representatives voted overwhelmingly today to extend funding for US federal government agencies and avoid a partial government shutdown. The Republican-controlled House, by a 366-34 vote, approved a measure that would maintain funding for the government at current levels until 14 March, deliver $10bn in agricultural aid and provide $100bn in disaster relief. Its passage was in doubt until voting began in the House at 5pm ET, following a chaotic intervention two days earlier by president-elect Donald Trump and his allies, including Tesla chief executive Elon Musk. The Democratic-led Senate is expected to approve the measure, and President Joe Biden has promised to sign it. Trump and Musk on 18 December derailed a spending deal House speaker Mike Johnson (R-Louisiana) had negotiated with Democratic lawmakers in the House and the Senate. Trump lobbied for a more streamlined version that would have suspended the ceiling on federal debt until 30 January 2027. But that version of the bill failed in the House on Thursday, because of opposition from 38 Republicans who bucked the preference of their party leader. Trump and Musk opposed the bipartisan spending package, contending that it would fund Democratic priorities, such as rebuilding the collapsed Francis Scott Key Bridge in Baltimore, Maryland. But doing away with that bill killed many other initiatives that his party members have advanced, including a provision authorizing year-round 15pc ethanol gasoline (E15) sales. Depending on the timing of the Senate action and the presidential signature, funding for US government agencies could lapse briefly beginning on Saturday. Key US agencies tasked with energy sector regulatory oversight and permitting activities have indicated that a brief shutdown would not significantly interfere with their operations. But the episode previews potential legislative disarray when Republicans take full control of Congress on 3 January and Trump returns to the White House on 20 January. Extending government funding beyond 14 March is likely to feature as an element in the Republicans' attempts to extend corporate tax cuts set to expire at the end of 2025, which is a key priority for Trump. The Republicans will have a 53-47 majority in the Senate next month, but their hold on the House will be even narrower than this year, at 219-215 initially. Trump has picked two House Republican members to serve in his administration, so the House Republican majority could briefly drop to 217-215 just as funding for the government would expire in mid-March. Congress will separately have to tackle the issue of raising the debt limit. Conservative advocacy group Economic Policy Innovation Center projects that US borrowing could reach that limit as early as June. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US government agencies set to shut down

20/12/24

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20/12/24

US government agencies set to shut down

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Viewpoint: More changes for Dated crude benchmark ahead

20/12/24

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20/12/24

Viewpoint: More changes for Dated crude benchmark ahead

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Trump backs new deal to avoid shutdown: Update

19/12/24

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19/12/24

Trump backs new deal to avoid shutdown: Update

Adds updates throughout Washington, 19 December (Argus) — US president-elect Donald Trump is offering his support for a rewritten spending bill that would avoid a government shutdown but leave out a provision authorizing year-round 15pc ethanol gasoline (E15) sales. The bill — which Republicans rewrote today after Trump attacked an earlier bipartisan agreement — would avoid a government shutdown starting Saturday, deliver agricultural aid and provide disaster relief. Trump said the bill was a "very good deal" that would also include a two-year suspension of the "very unnecessary" ceiling on federal debt, until 30 January 2027. "All Republicans, and even the Democrats, should do what is best for our Country, and vote 'YES' for this Bill, TONIGHT!" Trump wrote in a social media post. Passing the bill would require support from Democrats, who are still reeling after Trump and his allies — including Tesla chief executive Elon Musk — upended a spending deal they had spent weeks negotiating with US House speaker Mike Johnson (R-Louisiana). Democrats have not yet said if they would vote against the new agreement. "We are prepared to move forward with the bipartisan agreement that we thought was negotiated in good faith with House Republicans," House minority leader Hakeem Jeffries (D-New York) said earlier today. That earlier deal would have kept the government funded through 14 March, in addition to providing a one-year extension to the farm bill, $100bn in disaster relief and $10bn in aid for farmers. The bill would also provide a waiver that would avoid a looming ban on summertime sales of E15 across much of the US. Ethanol industry officials said they would urge lawmakers to vote against any package without the E15 provision. "Pulling E15 out of the bill makes absolutely no sense and is an insult to America's farmers and renewable fuel producers," Renewable Fuels Association chief executive Geoff Cooper said. If no agreement is reached by Friday at 11:59pm ET, federal agencies would have to furlough millions of workers and curtail services, although some agencies are able to continue operations in the event of a short-term funding lapse. Air travel is unlikely to face immediate interruptions because key federal workers are considered "essential," but some work on permits, agricultural and import data, and regulations could be curtailed. The US Federal Energy Regulatory Commission has funding to get through a "short-term" shutdown but could be affected by a longer shutdown, chairman Willie Phillips said. The US Department of Energy expects "no disruptions" if funding lapses for 1-5 days, according to its shutdown plan. The US Environmental Protection Agency would furlough about 90pc of its nearly 17,000 staff in the event of a shutdown, according to a plan it updated earlier this year. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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