Energy and commodities highlights: Middle East tensions, Panama Canal, global EV sales

The past week was marked by heightened geopolitical tensions as attacks on ships and oil infrastructure in the Middle East spread jitters through oil markets.

On May 12, the UAE government said that four commercial vessels suffered “sabotage” in the Gulf of Oman, without giving more specific details about the nature of the attack. The following day, a drone attack halted flows through Saudi Arabia’s main oil transport pipeline to terminals and refineries on the Red Sea.

The recent incidents added to concerns about the Strait of Hormuz, the world’s busiest oil transit choke point. After the US decided not to renew waivers for Iran sanctions, Iran retaliated with a threat to close or disrupt traffic on the Strait. That in turn prompted the US to send warships and warplanes to the region.

Meanwhile, the US-China trade dispute rumbled on, with China announcing it would hike tariffs on US LNG to 25%, part of a wider tariff increase in $60 billion of products imported from the US. The move is seen as potentially curbing growth in the US LNG export sector which has to date expanded rapidly as China had, until recently, been a key target market for LNG liquefaction project developers.

GRAPHIC OF THE WEEK

Amid tight supplies from OPEC members Iran and Venezuela, Asian refiners are looking for alternatives, and US oil could help fill the gap. This infographic explores export data and key factors influencing US crude flows to Asia.

Click for full-size infographic

WATCH: THE PANAMA CANAL

Jorge Quijano, CEO of the Panama Canal Authority, talks to Sameer Mohindru, S&P Global Platts senior editor, Asia shipping, about recent milestones, demand from the LNG sector, and future development.

METALS

China, Europe drive global March EV sales hike: Platts Analytics

Global sales of plug-in electric vehicles rose 55% on the year in March as China recovered from a slump in February, S&P Global Platts Analytics said in a monthly report. Global EV sales totaled 214,054 units in March compared with 122,288 in February. Chinese sales were up 88% on year, followed by Europe with a 55% gain and just 4.6% growth in the US.

AGRICULTURE

Argentina braces for competition as Brazil mulls opening up duty-free wheat imports

Argentina is bracing itself for competition in the Brazilian wheat market where it currently dominates with a 80-90% market share, as the latter considers allowing 750,000 mt of tariff-free wheat imports from outside of the Mercosur trade bloc that includes Argentina, Brazil, Paraguay, Uruguay and Venezuela.

COAL

Analysis: Met coal price spreads tighten between FOB Australia and China as demand rises

The rise in met coal prices in Asia-Pacific markets this week is tightening relative price variations between FOB Australia and coking coal markets in China. Demand for restocking to meet higher steel output in China and India may be leading the trend, with met coal supported by rising costs for iron ore and a move to use lower quality ores.

THE LAST WORD

"The question is how to bring in high investment if there is no competitive gas available at the same time. Committing to buy long-term LNG from the US on a Henry Hub indexed basis would not make the economics work.”

– Andree Stracke, chief commercial officer for origination and gas supply at RWE Supply and Trading, discussing the difficulties in investing in new gas power plants in Europe, at the Flame conference in Amsterdam this week.