Energy and commodities highlights: Iran oil sanctions, India's election, floating nuclear power

The White House announced on April 22 that it would end all waivers from Iran oil sanctions when they expire on May 2, sending ripples through oil markets.

The development puts the spotlight firmly on OPEC, as leading member Saudi Arabia, which holds the bulk of the world’s spare output capacity, will have to decide whether to pump more and risk destabilizing an OPEC/non-OPEC production accord.

Importers of Iranian crude are also in a quandary, and must decide how best to source replacement barrels. India, an important buyer of Iranian oil, has other options including Mexico and Iraq, according to sources in the country. Meanwhile, Japan’s economy minister said there was no need for the state to release strategic petroleum reserves as a result of the US’ move. Refiners in the country said they would consider procurement from a variety of sources including the Americas, Russia, the Middle East and West Africa.

GRAPHIC OF THE WEEK

Polling in is underway in India’s general election, giving 900 million eligible voters a say on the next government. The sweeping energy reforms pursued by India in recent years have gained broad acceptance and are likely to stay, irrespective of which political party or alliance comes to power. But further steps are needed to boost investment to lift domestic oil and gas production and reduce the country's oil dependence through development of alternative energy sources.

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PODCAST: US MIDSTREAM STRATEGY

Pipeline companies are increasingly venturing into LNG to connect gas from the wellhead to demand markets, in the US and overseas. Mergers and acquisitions and corporate restructurings also are in focus across the sector, which is looking to boost its growth potential by relying more on fixed fees and reducing exposure to volatile commodity prices.

ELECTRIC POWER

World's first floating nuclear power unit set to start operations in Russia: Rosatom

The world's only floating nuclear power unit is ready to start commercial operations in Russia, according to a statement from owner Rosatom. The Akademik Lomonosov is ready to start generating power after a series of comprehensive and successful tests on its twin KLT-40 reactor system.

SHIPPING

Capesize rates seen falling further on Vale dam accident

Q2 outlook: The Capesize market looks to be weak again as the Vale mining dam accident and repairs at key ports cut demand for the vessels that typically carry iron ore and coal.

METALS

Trump unlikely to back away from established metals tariffs: Bracewell

Tariffs applied by the Trump administration under US trade law Sections 232, 201 and 301 are unlikely to be lifted in the near term, despite bilateral and multilateral trade discussions between the US and other countries, Josh Zive, senior principal of Bracewell LLP, said Wednesday.

COAL

Deer Run, other Illinois Basin mines could change coal market dynamics

As several US coal mines resume production or get ready to start up, market participants are questioning whether the domestic market can absorb additional supply, particularly at a time when benchmark delivered European prices are at a three-year low.

THE LAST WORD

"The only reason we granted waivers back in November is because we faced a different oil market then. It was a tight and fragile oil market and if we had not granted those waivers, we then would have possibly seen a significant price spike. We are now in a position where [we] can end these waivers.”

– Brian Hook, US Special Representative for Iran, assured press that the US would work with producers and importers towards a smooth transition away from Iranian oil, in a briefing on April 25.