After a calmer start to the week in geopolitics, US-Iran tensions erupted again on July 18 when President Donald Trump said the US Navy had shot down an Iranian drone in the Strait of Hormuz.
Brent crude prices responded with a near 2% increase by in Singapore morning trading hours.
However, the impact of US sanctions on Iran and hostilities in the Persian Gulf on oil prices has been blunted by a global supply glut, according to a US official. Brian Hook, the US State Department's special representative for Iran, told S&P Global Platts in an interview that buyers were having no difficulty finding replacement barrels for Iranian crude.
Aside from supply fundamentals and the heightened risks for tankers in the Middle East, during the week there were further reminders of the wider existential crisis facing the global hydrocarbons industry in an age of energy transition and environmental awareness.
S&P Global Ratings said in a mid-year note that the number of oil and gas companies in distress is rising. The agency said declining interest from investors meant consolidation in the sector may not be a solution, leaving bankruptcy as the only option for some.
Meanwhile, legislators continue to push for more aggressive emissions curbs, with the new European Commission president, Ursula von der Leyen, saying she would propose a legal target of net zero CO2 by 2050. Von der Leyen made the comments shortly before being approved as president on July 16. The EU currently has a non-binding goal to cut emissions by at least 80% from 1990 levels by 2050.
GRAPHIC OF THE WEEK
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WATCH: RUSSIAN GAS IN EUROPE
PETROCHEMICALSUnfavorable economics will test appetite for plastics sustainability
Demand for recycled plastics over the longer term is expected to grow, but the second half of 2019 will test the European market’s true commitment to using recycled plastics, amid challenging economics.
COALMore Chinese ports place import curbs on seaborne coal: sources
Ports in Guangxi in southern China and the country’s Jingtang port halted custom declarations for all coal imports effective July 15. The move came on the heels of similar curbs at a northern port, stoking fears among market sources of wider restrictions for imported coal.
ELECTRIC POWERUS Senate committee backs advanced nuclear power plants
The US Senate Energy and Natural Resources Committee passed a bill July 16 supporting advanced nuclear reactor deployment, by allowing the federal government to sign long-term power purchase agreements and calling for deployment of new reactor designs at government facilities.
THE LAST WORD"VLCCs are the sexy, big vessel that everybody's talking about, but the workhorses are going to be primarily the Suezmax-class vessels. Most crude today globally is moved on the Suezmax."
– Sean Strawbridge, CEO of the Port of Corpus Christi, Texas, in an interview with S&P Global Platts. Strawbridge outlined the port’s ambitions to capitalize on growing US crude oil export volumes, and Asian buyers’ appetite for a mix of US grades.