2024.11.20

Norway's Johan Sverdrup Oilfield Restores Two-Thirds of Output After Power Outage

Equinor has resumed production at Norway's Johan Sverdrup oilfield, reaching two-thirds of its capacity by Tuesday morning following a power outage caused by overheating at an onshore converter station.

• Cause of Outage: The incident stemmed from overheating at the Kaarstoe electrical converter station

• Production Impact: Monday’s outage halted operations at western Europe's largest oilfield, briefly driving up global oil prices before easing as production resumed.

• Efforts are underway to restore full output as repair work on the converter station continues.

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Oil Prices Hold Steady

Oil prices remained largely unchanged on Tuesday as concerns over supply disruptions due to escalating tensions in the Russia-Ukraine war were offset by the resumption of partial production at Norway's Johan Sverdrup oilfield.

• Price Changes: Brent crude rose by $0.01 to $73.31 per barrel, while WTI crude increased by $0.23 to $69.39.

• War Escalation: Ukraine's use of U.S.-provided ATACMS missiles against Russian territory prompted warnings of heightened risks, including a potential nuclear threat from Russia.

• China's Imports: Analysts suggest China’s crude oil imports surged in November, nearing record levels after months of declines, driven by favorable pricing.

• Sverdrup Restart: Equinor resumed production at the Johan Sverdrup oilfield, mitigating gains after a prior shutdown had pushed oil prices higher.

• Other Factors: U.S. crude inventories reportedly rose by 4.75 million barrels last week, exceeding analyst expectations, while Iran offered to halt uranium enrichment expansion, signaling potential geopolitical de-escalation.

Market sentiment remains cautious amid these mixed signals, balancing geopolitical concerns with signs of recovery in supply and demand dynamics.

[SLOW] Oil Market

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China's Oil Import Shift Spurs Tanker Market Challenges

Reduced Chinese oil imports and a shift to nearby sources are straining the tanker market, with rates falling below last year's levels. Imports have dropped by 440,000 bpd as refiners cut activity due to weak demand and high prices. Tonne-miles are down, and untraceable "dark fleet" ships complicate tracking impacts. Analysts foresee a tough winter for tanker owners, with little near-term relief expected.

[SLOW] Daily VLCC Market

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Dangote Refinery Begins Gasoline Exports, Signaling Regional Market Shake-Up

Nigeria’s Dangote Refinery has exported a gasoline shipment to waters off Togo, hinting at its potential to disrupt regional fuel markets.

• First Export Moves: The CL Jane Austen tanker transported over 300,000 barrels of gasoline, marking a step towards large-scale exports.

• Regional Impact: The refinery’s ramp-up could significantly alter regional fuel flows, challenging existing supply chains.

• Domestic Dynamics: Despite this export, Nigeria continues to rely on fuel imports, having recently ended its state-owned oil company’s buying monopoly.

• Next Steps Unclear: The cargo's final destination remains uncertain, as the area near Togo often facilitates ship-to-ship transfers for further transportation.

This signals a growing role for the refinery in both domestic and international markets.

 [SLOW] Flow

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Russia’s Crude Exports Hit Four-Month Low

Russia’s seaborne crude exports fell by 150,000 bpd to their lowest since September, with western port shipments dropping nearly 30%. Weekly revenue plunged to $1.25 billion due to reduced volumes and lower prices. Asia remains the main market, with most exports headed to China and India. EU sanctions targeting Russia's shadow tanker fleet may further impact flows.

[SLOW] Trade Flow - From Russia To World Trade Flow

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Oil Glut Set to Thwart Trump’s Call to ‘Frack, Frack, Frack’

Despite President-elect Donald Trump’s push for increased shale production, a global oil glut is expected to slow U.S. output growth in the coming years. Analysts forecast the U.S. adding only 251,000 bpd through 2025, the slowest growth since the pandemic. While shale producers like Diamondback and EOG Resources plan minimal growth, Exxon and Chevron are expanding. However, global supply is expected to surpass demand by 1-2 million barrels per day by 2025, contributing to a surplus and affecting oil prices. Lower prices could drive producers to prioritize shareholder returns over increased production.

[SLOW] EIA - Crude Oil Outlook