US delays return of 8mn bl of crude to SPR

Spanish Market: Crude oil
16/03/23

President Joe Biden's administration has delayed by roughly a year the return of more than 8mn bl of crude borrowed from the US Strategic Petroleum Reserve (SPR).

The delays were approved as recently as last week, when the US Energy Department revised two "exchange" contracts it negotiated with Shell, delaying the return of 3.6mn bl of crude to the SPR until 2025. The administration last year separately revised four other contracts, delaying the return of nearly 4.5mn bl of crude initially planned to be returned to the SPR from 2022-24.

The contract revisions, obtained through the Freedom of Information Act, appear at odds with remarks by US energy secretary Jennifer Granholm, who earlier this year said the administration wants to "accelerate" the return of crude exchanges as part of a three-part strategy to partially refill the SPR. With 371.6mn bl of crude in inventory, the reserve is currently at its lowest level in nearly 40 years.

One part of the administration's strategy to refill the SPR "is to accelerate some of the exchanges that were announced before to get those back in," Granholm told reporters at the White House on 23 January.

Oil companies and traders borrowed more than 27.4mn bl of crude from the SPR between September 2021 and June 2022, most under a program Biden created in hopes of bringing down gasoline prices. Under the initial contracts, companies were required to return most of the crude by 2024, along with an in-kind "premium" set at 2.3-14.6pc of the volume they borrowed.

But rather than "accelerate" the return of oil to the SPR, the Energy Department has repeatedly sought to delay the return of crude, according to nearly two dozen contracts and contract modifications obtained by Argus under public records requests.

The Energy Department failed to respond to repeated requests for clarification on Granholm's remarks.

The Energy Department renegotiated three of the exchange contracts in February 2022, in the weeks before Russia's invasion of Ukraine caused global oil prices to rise. Contract revisions for ExxonMobil and TotalEnergies delayed the return of 3.5mn bl of crude that was set to be returned that year. ExxonMobil declined to comment. TotalEnergies did not respond to a request for comment.

The Energy Department followed up in August by revising another exchange contract with Chevron that delayed by more than a year the return of 939,000 bl that had been scheduled for this September. The final contract revision, reached with Shell on 8 March, delayed the return of 3.6mn bl of crude by 11 months until July to August of 2025. Neither company responded to a request for comment.

The 8mn bl remains relatively small compared with the 180mn bl of crude withdrawn from the SPR last year as part of emergency sales, or an upcoming 26mn bl drawdown scheduled for delivery on 1 April-30 June. Republicans have criticized the SPR drawdowns and question whether the administration has a cohesive plan to refill the emergency stocks.

The SPR could be refilled on a faster timetable if the White House follows through with plans to purchase crude outright at a targeted price of $67-$72/bl. Nymex WTI crude futures for delivery in April settled at $67.61/bl on Wednesday.

By Chris Knight

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07/04/25

Flooding on US rivers mires barge transit

Houston, 7 April (Argus) — Barge transit slowed across the Arkansas, Ohio and lower Mississippi rivers over the weekend because of flooding, which prompted the US Army Corps of Engineers (Corps) to close locks and issue transit restrictions along the waterways. The Corps advised all small craft to limit or halt transit on the McClellan-Kerr Arkansas River Navigation System (MCKARNS) in Arkansas because flows reached above 200,000 cubic feet per second (cfs), nearly three times the high-water flow. The heavy flow is expected to persist throughout the week, posing risks to those transiting the river system, said the Corps. Some barges have halted movement on the river, temporarily miring fertilizer resupply efforts in Arkansas and Oklahoma in the middle of the urea application season. The Corps forecasts high flows to continue into Friday, and the National Weather Service predicts several locations along the MCKARNS will maintain a moderate to minor flood stage into Friday as well. Both the Arthur V Ormond Lock and the Toad Suck Ferry Lock, upriver from Little Rock, Arkansas, shut on 6 April because of the high flows. Flows along the Little Rock Corps district reached 271,600cfs on 7 April. The Corps forecasts high flows to continue into Friday. Ohio and lower Mississippi rivers The Corps restricted barge transit between Cincinnati, Ohio, and Cairo, Illinois, on the Ohio River to mitigate barge transportation risks, with the Corps closing two locks on the Ohio River on 6 April and potentially four more in the coming days. Major barge carrier American Commercial Barge Line (ACBL) anticipates dock and fleeting operations will be suspended at certain locations along the Mississippi and Ohio rivers as a result of the flooding. NWS forecasters anticipate major flooding levels to persist through the following week. Barge carriers also expect a backlog of up to two weeks in the region. To alleviate flooding at Cairo, Illinois, where the Ohio and Mississippi Rivers meet, the Corps increased water releases at the Barkley Dam on the Cumberland River and the Kentucky Dam on the Tennessee River. The Markland Lock, downriver from Cincinnati, Ohio, and the Newburgh lock near Owensboro, Kentucky, closed on 6 April. The Corps expects the full closure to remain until each location reaches its crest of nearly 57ft, which could occur on 8 or 9 April, according to the National Weather Service (NWS). Around 50 vessels or more are waiting to transit each lock, according to the Lock Status Report published by the Corps on 7 April. The Corps also shut a chamber at both Cannelton and McAlpine locks. The John T Myers and Smithland locks may close on 7 April as well, the Corps said. The Olmsted Lock, the final lock before the Ohio and Mississippi rivers, will require a 3mph limit for any traffic passing through. The NWS expects roughly 10-15 inches of precipitation fell along the Ohio and Mississippi River valleys earlier this month, inducing severe flooding across the Ohio and Mississippi River valleys. A preliminary estimate from AccuWeather stated an estimated loss of $80-90bn in damages from the extreme flooding. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US producers look overseas as shale stalls

07/04/25

US producers look overseas as shale stalls

New York, 7 April (Argus) — US shale producers are seeking to deploy their expertise around hydraulic fracturing in international markets, in a marked departure from their recent strategy and one that is set to accelerate as domestic output slows. Continental Resources — whose billionaire founder and executive chairman Harold Hamm was one of the driving forces behind the shale revolution after figuring out how to unlock the vast resources of North Dakota's Bakken basin with horizontal drilling — recently announced plans to explore for unconventional resources in Turkey. And EOG Resources aims to kick-start a drilling campaign in Bahrain. Early successes could prompt a scramble by peers to follow suit, which would be a reversal of the trend seen in the early days of the shale boom when the industry largely retrenched from overseas investments to concentrate on exploiting domestic plays. And while decisions to venture abroad have been mainly based on individual company strategies up until now — and investors have been lukewarm at best — forecasts for shale to start plateauing in the coming years could lend them greater impetus. "Maybe, as they have success, that will draw others in," energy investment firm Bison Interests chief investment officer and founder Josh Young says. "It could be the start of something big." The caveat is that a potential international push at scale is unlikely to happen overnight, and companies such as Murphy Oil and APA — which already have exploration campaigns under way from Vietnam to Ivory Coast and Suriname — have underperformed compared with their rivals. "You are not seeing that market acceptance or market credit for international projects," Young says. That perception may shift if international exploration yields above-average returns for shareholders, boosting the case for producers to seek to build out their inventory further afield as growth in the shale patch slowly grinds to a halt. International exploration may have its own risks, given shale's success story has largely been confined to the US and Argentina to date. But the "cost of entry is relatively low compared to a North American landscape with little room for exploration and high premiums for solid assets in the Permian", consultancy Rystad Energy vice-president for North America oil and gas Matthew Bernstein says. Hamm, who took Continental private more than two years ago after tiring of public markets, recently warned that US shale is beginning to plateau . "What we really need to concentrate on is where we go as we crest right here in America, what the downside looks like," he told the CERAWeek by S&P Global conference in Houston. He also signalled a greater openness to drill outside North America. Talking Turkey Continental recently announced a joint venture with Turkey's national oil company and US-based TransAtlantic Petroleum to develop oil and gas resources in southeast and northwest Turkey. State-owned Turkish Petroleum has pegged initial estimates from the Diyarbakir basin in the southeast that could reach 6bn bl of oil and 12 trillion-20 trillion ft³ (340bn-570bn m³) of gas. The Thrace basin in northwest Turkey may hold up to 20 trillion-45 trillion ft³. "We see immense potential in Turkey's untapped resources," Continental's chief executive, Doug Lawler, says. And in February, EOG Resources announced a tie-in with state-owned Bapco Energies to evaluate a gas prospect in Bahrain. EOG will take on the role of operator, and the venture is awaiting further government approvals. "The formation has previously been tested using horizontal technology, delivering positive results," EOG chief executive Ezra Yacob says. By deploying its existing skillset around horizontal drilling and completions, EOG is confident of achieving results that are competitive with projects in its domestic portfolio. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Asian governments hold fire on tariff retaliation

07/04/25

Asian governments hold fire on tariff retaliation

Singapore, 7 April (Argus) — Governments in Asia-Pacific have so far not followed China's lead by retaliating against US president Donald Trump's import tariffs, even as they warn of the potential for long-term economic disruption. The leaders of Vietnam, Malaysia, Indonesia, Taiwan and Singapore said over the weekend that they are not planning to respond in kind to the US tariffs. The restrained reactions came despite China's decision to match Trump's targeted tariffs with duties of 34pc on all imports from the US. China's tariffs, announced late last week, take effect on 10 April, a day after what Trump is calling his "reciprocal" duties on a range of countries. Countries in Asia-Pacific have been hit with some of the highest of Trump's targeted duties. Vietnam, which is facing one of the highest targeted tariff rates of any country at 46pc, is considering removing all its own tariffs on US imports, Trump said following a call with To Lam, general secretary of Vietnam's communist party, on 4 April. The offer has not been officially confirmed by Hanoi. Vietnam benefitted from the tariffs that Trump imposed on China during his first term in office, as some manufacturing and exports were shifted to the country. That helped send its trade surplus with the US to a record $123bn last year, the third-highest of any single country behind China and Mexico, according to US customs data. Malaysia, which faces a 24pc tariff, will not levy retaliatory duties, prime minister Anwar Ibrahim said on 6 April. The US duties are a major threat to the world economy and could force Kuala Lumpur to reduce its forecast for gross domestic product (GDP) growth this year, he warned. The direct impact of the US tariffs on commodity exporters like Malaysia and its neighbour Indonesia has been reduced by the extensive exemptions announced for energy, metals and other commodities. Still, the prospect of a global economic slowdown and disruption to trade flows threatens to have a major impact. Despite their measured approach, governments of emerging Asian economies may struggle to quickly negotiate lower tariffs given Trump's focus on reducing bilateral trade deficits, analysts at UK bank Barclays said on 7 April. The bank has reduced its 2025 forecast for GDP growth in emerging Asia by 0.2 percentage points to 3.3pc and warned of the risk of deeper cuts. Australia eyes price hit The government of Australia, another large commodity exporter, warned on 7 April that the uncertainty caused by Trump's tariffs could reduce consumer confidence and potentially damage the budget by causing a decline in commodity prices. Trump's so-called "liberation day" tariffs are more significant than expected when it released its budget in March, the Australian Treasury said in its economic and fiscal outlook released ahead of federal elections next month. The direct impact of the tariffs on Australia would be limited, but indirect effects would be larger because of the hit imposed on the country's major trading partners, including China, it said. "The potential magnitude and persistence of the economic effects of these announcements has resulted in greater-than-usual uncertainty around the outlook," the Treasury said. Trump has targeted Australia with the minimum 10pc tariff, but this could still disrupt its exports of beef and tallow, among other products. Australian prime minister Anthony Albanese has also pledged not to retaliate with tariffs on US imports. Japan and South Korea, long-standing allies which nevertheless have been singled out for higher US tariff rates of 24pc and 25pc respectively, have also indicated they will not respond in kind. The US accounted for almost 19pc of South Korea's total exports in 2024, including passenger cars, auto parts and lithium-ion batteries. Seoul is considering measures to support its automobile industry in the wake of the tariffs, the trade and industry ministry said. India, which faces a 26pc rate, is considering lowering import tariffs on US goods, including a 2.75pc duty on LNG, to ease tensions. By Kevin Foster, Tom Major and Joseph Ho Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Oil, stock markets slump as tariffs take effect: Update

07/04/25

Oil, stock markets slump as tariffs take effect: Update

Updates with latest oil prices, stock market declines Singapore, 7 April (Argus) — Oil futures and stock markets fell sharply again on Monday after the first tranche of US import tariffs came into force. Crude oil futures fell by almost 5pc, with US benchmark crude WTI futures dropping below $60/bl to a new four-year low. Stock markets in Asia and Europe also dropped sharply. Markets in China — which were closed for a holiday at the end of last week — dropped by around 10pc, while Japanese and South Korean exchanges fell by up to 8pc. The sell-off in crude futures accelerated when markets in Europe opened, in line with big drops in the continent's stock markets. Germany's Dax stock exchange fell by as much as 10pc, while the UK FTSE 100 dropped by up to 6pc. Shares in oil majors BP and Shell were up to 9pc lower. US president Donald Trump's 10pc tariff on imports from all countries took effect on 5 April, with exemptions for some commodities . What Trump has described as "reciprocal" tariffs targeting some of the US' biggest trade partners are due to enter into force at 12:01 ET (04:01 GMT) on 9 April. Trump has given no indication that he will cancel or postpone the tariffs, despite the market turmoil in recent days, although he has held out prospects of negotiated reductions with some countries. The president denied on 6 April that he is crashing the markets deliberately. "But sometimes you have to take medicine to fix something," he told reporters. China announced its own 34pc tariffs on all US imports late on 4 April, adding to the pressure on financial markets. Beijing will continue to take "resolute measures" to protect its interests, state-owned media reported over the weekend. China is the only major US trading partner that has so far retaliated against the US tariffs. Several other countries in Asia have said they do not plan to retaliate or have asked Trump to delay the tariffs. Benchmark crude futures have now fallen by up to 18pc since Trump announced his tariffs. Crude oil came under additional pressure on 7 April after Saudi Arabia's state-controlled producer Saudi Aramco reduced its official formula prices for May-loading cargoes, including particularly sharp cuts for buyers in Asia. The front-month June Brent contract on Ice fell by 4.7pc to a low of $62.51/bl. The Nymex front-month May crude contract fell to $58.95/bl, the lowest since April 2021. By Kevin Foster Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Oil futures, stock markets slump as tariffs take effect

07/04/25

Oil futures, stock markets slump as tariffs take effect

Singapore, 7 April (Argus) — Oil futures and stock markets fell sharply again in early Asian trading on Monday, after the first tranche of US import tariffs came into force. Crude futures fell by more than 4pc after markets opened. US benchmark crude WTI futures fell below $60/bl to a new four-year low. Regional stock markets also dropped sharply. Markets in China — which were closed for a holiday at the end of last week — dropped by almost 10pc, while Japanese and South Korean exchanges fell by up to 6pc. US president Donald Trump's 10pc tariff on imports from all countries took effect on 5 April, with exemptions for some commodities . What Trump has described as "reciprocal" tariffs targeting some of the US' biggest trade partners are due to enter into force at 12:01 ET (04:01 GMT) on 9 April. Trump has given no indication that he will cancel or postpone the tariffs, despite the market turmoil in recent days, although he has held out prospects of negotiated reductions with some countries. The president denied on 6 April that he is crashing the markets deliberately. "But sometimes you have to take medicine to fix something," he told reporters. China announced its own 34pc tariffs on all US imports late on 4 April, adding to the pressure on financial markets. Beijing will continue to take "resolute measures" to protect its interests, state-owned media reported over the weekend. China is the only major US trading partner that has so far retaliated against the US tariffs. Several other countries in Asia have said they do not plan to retaliate or have asked Trump to delay the tariffs. Benchmark crude futures have now fallen by up to 18pc since Trump announced his tariffs. Crude oil came under additional pressure on 7 April after Saudi Arabia's state-controlled producer Saudi Aramco reduced its official formula prices for May-loading cargoes, including particularly sharp cuts for buyers in Asia. The front-month June Brent contract on Ice fell by 3.9pc to a low of $63.01/bl soon after trading opened in Asia on 7 April, before later recovering slightly to trade 2.8pc lower at 10:45am Singapore time (3:45am GMT). The Nymex front-month May crude contract fell to $59.38/bl, the lowest since April 2021, before narrowing its losses slightly. By Kevin Foster Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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