Wednesday, September 30, 2020

Gold’s Record High Gives New Life to Dollar Doomsayers

Gazimal | The Image Bank | Getty Images 

This year ranks as one of the best on record for investors in the precious metal, with futures prices up almost 24% for 2020

Can gold keep going?

This year ranks as one of the best on record for investors in the precious metal, with futures prices up almost 24% for 2020 after hitting an all-time high in August.

Though gold’s detractors through the ages are numerous and prominent, including the likes of Warren Buffett and John Bogle, the events of this year are giving new life to those who insist the arc of financial history points toward the inevitable debasement of currencies like the dollar. Bullish investors contend that trend means new highs for gold are in store.

Gold has been a prime beneficiary of the Federal Reserve’s determination to leave borrowing costs at historically low levels to spur the economy after the shock of Covid-19. Chairman Jerome Powell formalized that stance in August, saying the central bank had dropped its longstanding practice of pre-emptively raising rates to head off higher inflation.

The prospect of the Fed pinning interest rates near zero for years to come and allowing inflation to run hot helped pull so-called real yields into negative territory. This means investors expect to lose money, after accounting for inflation, if they buy 10-year U.S. Treasurys and hold them until maturity.

In such an environment, money managers say the precious metal has lived up to its status as a haven, shielding investors in a year when stocks have been racked by volatility.

 “[Gold] has thousands of years of a track record of offering some form of protection against the unexpected,” said George Milling-Stanley, chief gold

strategist at State Street Global Advisors. “That’s worth having.”

For decades after Paul Volcker’s Fed raised interest rates to tame inflation in the early 1980s, boosting real yields, the fact that gold paid no dividend or coupon counted against it. Now, with real yields on government bonds back below zero, gold’s lack of income isn’t such a drawback.

The metal’s price surpassed $2,000 a troy ounce for the first time ever this quarter, a milestone in a bull market that some say began in 2015 and climbed to giddy heights after Covid-19 kneecapped the world economy this spring. Gold has room to keep rising, some say.

The price would have to climb another 43% from its late-August level, crossing $2,800 an ounce, to top its peak from early 1980, after adjusting for rising consumer prices in the four decades since then. Fueled by runaway inflation, the Iranian hostage crisis and the Soviet Union’s invasion of Afghanistan, prices crested at $850 in the London market on Jan. 21, 1980. That remains their all-time high in inflation-adjusted terms.

Moves in real yields explain 72% of swings in the gold price over the past 12 months, according to analysis by Michael Sneyd, head of macro quantitative and derivative strategy at BNP Paribas. Changes in inflation expectations accounted for another 21%.

Sliding yields have given bullion, which is denominated in dollars, an additional boost by denting the U.S. currency. The WSJ Dollar Index, which tracks the greenback against several other currencies, fell for five straight months through August. Though the dollar has since strengthened, gold bulls say pressure is bound to intensify.

The greenback’s role as the world’s reserve currency is being called into question by some gold bulls, including analysts at Goldman Sachs Group. Gold is the currency of last resort, especially when governments are debasing fiat currencies and pushing real interest rates to record lows, the analysts wrote in July.

Bond yields have burnished gold in another way. Since yields move inversely to prices, the fact they are so low means Treasurys are unusually expensive. Many money managers worry government bonds, traditionally owned as a buffer, won’t have much headroom to rise if stocks take another tumble.

Investors like Michael Kelly, global head of multiasset at PineBridge Investments, are on the hunt for other assets that zig when stocks zag. “This is crystal clear: Financial repression is coming even to the U.S. and the U.K. and there will be negative real rates as far as the eye can see,” Mr. Kelly said. “That supercharges gold.”

Gold has done a good job at smoothing out returns in recent decades, according to Hilary Till, principal at Premia Research LLC, who thinks money managers should consider investing in bullion as a counterweight to stocks.

Take a hypothetical fund that invested 30% in a basket of stocks tracking the S&P 500 index, 30% in gold futures and 40% in 10-year Treasurys at the end of 1999. This portfolio earned compound total returns of 7.2% a year through 2019, Ms. Till calculates. Its worst result was to lose 2.3% in 2015. In contrast, a portfolio with 60% stocks and 40% bonds earned 6.6% a year and shed 14% in 2008.

For others, however, many of the arguments made in favor of investing in gold don’t stand up to scrutiny.

This year’s surge in prices of the precious metal coincided with a rush of speculative trading in derivatives and shares of companies with little or no record of making profits. Gold’s advance is another symptom of risk-taking encouraged by lavish economic stimulus and enabled by easy access to financial markets for inexperienced traders, skeptics suggest.

“It’s still mostly speculation,” said Simon Mikhailovich, co-founder of the Bullion Reserve. “To me, that’s not the point of owning gold.”

Investors are seeking exposure to gold prices through financial products such as exchange-traded funds rather than direct ownership of gold, which is the ultimate haven because it sits outside the financial system, Mr. Mikhailovich added.

Exchange-traded funds backed by gold, which allow investors to bet on bullion prices with the ease of buying a stock, have become wildly popular. Investors poured money into the funds for the ninth straight month in August, according to the World Gold Council. ETFs now sit on a hoard of gold weighing 3,824.05 metric tons, more than any central bank other than the Fed.

There is no evidence that gold acts as a reliable hedge against inflation over time periods other than those spanning centuries, said Campbell Harvey, a finance professor at Duke University, citing a 2013 paper that he co-wrote. Nor has the idea of owning bullion in case the U.S. government defaults made sense since President Nixon ended the convertibility of dollars into gold in 1971, according to Prof. Harvey.

“This is basically a speculative situation,” he said. “Gold is no different from equities or cryptocurrencies.”

Write to Joe Wallace at

Marathon Petroleum, top U.S. refiner, begins widespread job cuts

 Marathon Oil logo 2009.svg 

HOUSTON (Reuters) - Marathon Petroleum Corp MPC.N, the largest U.S. oil refiner, began cutting jobs on Tuesday across the company, according to people familiar with the matter, as the COVID-19 pandemic sapped demand for motor fuels.

U.S. refiners have posted large losses this year as fuel consumption tumbled amid lockdowns and work-from-home policies to combat the spread of the coronavirus. Thin profit margins have been undercut by the need to operate plants at less than 80% capacity.

Marathon officials are “communicating with our employees about measures we announced earlier this year to strengthen Marathon Petroleum for short-term and long-term success,” a spokeswoman said in a statement. She declined to comment on specific actions.

The Findlay, Ohio-based company has been shedding units to improve results. It had 60,000 employees as of Dec. 31, with two-thirds in retail operations that are being acquired by 7-Eleven Inc, an arm of Japan's Seven & i Holdings Co Ltd 3382.T.

About 60 salaried staff were let go by midday on Tuesday at Marathon’s large Galveston Bay plant in Texas and another 60 people were dismissed at the company’s Los Angeles refinery, the sources said.

The Galveston Bay operation may lose as many as 100 workers this week and up to 200 before the reductions end, one of the people said.

As of Tuesday night, 45 salaried employees had been let go at the Garyville, Louisiana, refinery, sources said.

In August, Marathon began closing refineries in Martinez, California, and Gallup, New Mexico, eliminating 800 jobs. The latest cuts are across the company, one of the people said.

It is expected to report a $623 million third-quarter loss on Nov. 2, according to IBES data from Refinitiv. It lost $9.2 billion in the first half of the year, mostly on impairment charges.

Last week, LyondellBasell Industries LYB.N also disclosed plans to cut 10% of staff at its Houston oil refinery because of heavy losses. Plant operations would be challenged for several years because of the drop in demand, a LyondellBasell executive said.

Reporting by Erwin Seba in Houston; Editing by Gary McWilliams and Peter Cooney

Tuesday, September 29, 2020

Big Oil May Need To Shed $111 Billion In Assets In Clean Energy Push

The companies in the study – ExxonMobil, Chevron, ConocoPhillips, BP, Shell, Total, Eni, and Equinor – may have to divest combined resources of up to 68 billion barrels of oil equivalent in various geographies, with an estimated value of US$111 billion and spending commitments in 2021 totaling US$20 billion, according to the study.

The Europe-based group of those companies, dubbed ‘Majors+’ by Rystad Energy, have pledged various commitments to become net-zero energy companies and significantly expand their renewable energy, hydrogen, or power market portfolios.

BP, for example, said in its new strategy last month that it would reduce its oil and gas production by 40 percent by 2030 through active portfolio management and would not enter exploration in new countries. Equinor mandated its incoming chief executive Anders Opedal – who will replace retiring Eldar Sætre in November – to accelerate Equinor’s transition from an oil company to a broad energy company. Eni announced in June a “new business structure to be a leader in the energy transition,” creating an Energy Evolution division in the company to accelerate its plans to significantly boost renewable power generation and biofuels production. Total is betting on EV batteries and solar power.

Commenting on the Majors’ strategies in oil and gas in view of the energy transition, Rystad Energy’s Senior Vice President Tore Guldbrandsoy said:

“Companies will look to expand in the prioritized countries through exploration, acquisitions or asset swaps with other Major+ players. However, to stay in a country that our criteria exclude, a company may instead seek to grow its local business more aggressively to make sure the portfolio will have a positive and more significant impact on overall performance.”

The companies are expected to keep a presence in the US, and most of them may also remain in Australia and Canada.

The majors could also strike deals among themselves in some regions. BP, Eni, and ConocoPhillips, for example, could consider buying the Indonesian portfolios of ExxonMobil, Total, and Shell, according to Rystad Energy. 

Monday, September 28, 2020

Global Oil & Gas Project Sanctioning Set to Recover and Exceed Pre-Covid-19 Levels from 2022

Release: Rystad Energy

The Covid-19 pandemic has devastated global oil and gas project sanctioning this year and will cause total committed spending to drop to around $53 billion from 2019’s $190 billion, Rystad Energy projects. Postponed plans will, however, cause the total worth of final investment decisions (FIDs) to double next year and exceed pre-pandemic levels already from 2022.

Offshore commitments are now expected to reach $34 billion in 2020, down from 2019’s $101 billion. Onshore sanctioning is likely to fall to $19 billion this year from $89 billion last year.

Rystad Energy estimates total sanctioning to bounce back to around $100 billion in 2021, primarily supported by offshore projects, whose value is forecasted at $64 billion for the year. Although lagging onshore projects are projected to only account for $36 billion in 2021, they will see a steep rise in 2022 to around $100 billion, topping the expected $95 billion worth of offshore commitments that year.

In this update, we have revised up our 2020 offshore sanctioning total from $26 billion to $34 billion. This was driven by the Mero-3 sanctioning in Brazil, which is estimated to cost $2.5 billion to first oil. MISC has a letter of intent in place with Petrobras for the charter of the FPSO. The contractor will sub-contract the vessel construction work to Chinese yards, with China Merchants Heavy Industry (CMHI) leading the race to build both the hull and topsides. Siemens will deliver the power generation modules, while Aker Solutions is performing front-end engineering and design (FEED) and engineering work on the FPSO topsides.

We also expect commitments worth $3.6 billion related to the Payara development off Guyana in 2020. SBM Offshore is operating under an advanced commitment on the FPSO with ExxonMobil and its partners and the contractor has started procurement activities in collaboration with Chinese and Singaporean yards. The Chinese yard Shanghai Waigaoqiao Shipbuilding (SWS) is responsible for supplying the hull for the FPSO and the topsides will be built by Dyna-Mac and Keppel. It is now only a matter of when the FID takes place, and we expect it to happen soon.

Before the oil price crash, Shell had awarded a major contract to Sembcorp Marine for construction of the topsides and hull of a Floating Production Unit (FPU) for the Whale project in the US Gulf of Mexico. Now uncertain economic conditions have forced Shell to defer FID for the project to 2021. Whale has a breakeven of over $40 per barrel. As the second wave of Covid-19 surges through Europe, America and South Asia, it is uncertain whether the new development will start anytime soon, as the social distance norms and quarantine requirements will not only hamper the pace of development but could also lead to cost overruns.

When it comes to recent developments, Gazprom Neft has started development activities on its Chayandinskoye oil-rim development in Russia. The well construction program is under way and the expansion of the existing central processing facility at the main field is likely to start soon. The onshore development is estimated to cost around $1.3 billion and the field is expected to come on line by 2022.

Recently, the Norwegian Ministry of Petroleum and Energy approved the plan for development and operation (PDO) of the Balder Future project. The partners, Vaar Energi and Mime Petroleum, submitted a revised PDO in December last year and selected their preferred contractors in 2019. The $2 billion development plan includes an upgrade of the Jotun floating production, storage, and offloading (FPSO) vessel which will operate between the Balder and Ringhorne fields. The FPSO is being upgraded by Worley, while Baker Hughes and Ocean Installer are responsible for supplying the subsea facilities.

Lastly, China Offshore Oil Engineering Co. (COOEC) confirmed the start of development activities on CNOOC’s Luda 6-2 oilfield off China in its second-quarter results. The Luda 6-2 development will entail a central processing platform and is estimated to cost nearly $170 million in greenfield commitments. Production is likely to start in early 2022.

Nigeria’s PIB Moving Forward Once Again

Nigerian President Muhammadu Buhari has signed off on the Petroleum Industry Bill (PIB) which looks to reform the West African nation’s oil industry, according to Reuters reporting on September 23. The PIB has been in the making for more than a decade and a half,and has seen plenty of delays that have held up investment in the country’s oil and gas industry.

According to the Reuters report, four sources familiar with the matter said the bill will be formally presented in the Senate as early as next week. The Ministry of Petroleum Resources had presented the bill to the president last month for his endorsement after it had consulted with stakeholders in the oil and gas sector.

The report stated: “Excerpts from the bill seen by Reuters included provisions that would streamline and reduce some oil and gas royalties, boost the amount of money companies pay to local communities and for environmental clean-ups and alter the dispute resolution process between companies and the government.

“It also included measures to push companies to develop gas discoveries and a framework for gas tariffs and delivery.”

Friday, September 25, 2020

U.S Keeps Top Crude Oil Producer Status

 An American flag 

Despite oil production curtailments earlier this year that are not fully back online, the United States maintained its global status as the leading supplier of crude oil in July, ahead of Russia and Saudi Arabia.  

According to data from the Joint Organisations Data Initiative (JODI) database, which collects self-reported figures from 114 countries, U.S. crude oil production rose in July back up to above 11 million barrels per day (bpd). At 11.035 million bpd, American crude oil output was 5.7 percent higher than the June production of 10.436 million bpd. Production in June had also increased month over month after the May figure of 10 million bpd—the lowest U.S. monthly production since late 2017.  

U.S. exports of crude oil also rose in July compared to June. The United States exported 2.867 million bpd in July, up from 2.753 million bpd in June, according to the JODI database.

The U.S. became the world’s biggest crude oil producer, surpassing both Saudi Arabia and Russia, in 2018, and has kept that status since then, while Saudi Arabia and Russia – bound by their OPEC+ production cut pact to prop up prices and rebalance demand and supply – have been withholding production from the market.

The most recent OPEC+ agreement, which started in May after a brief price war between the two rivals-partners in March and April, currently has Russia and Saudi Arabia cut their production and keep it at 9 million bpd each until the end of this year.

In June, Russia produced more crude oil than Saudi Arabia, beating it to the second place of the largest oil producers in the world, behind the number-one producer, the United States. June was the month in which Saudi Arabia voluntarily slashed its oil production by an additional 1 million bpd for just one month, on top of the 2.5 million bpd it was supposed to cut as per the OPEC+ deal.

In July, Russia kept its place as the world’s second-largest oil producer ahead of Saudi Arabia, JODI data showed.

By Charles Kennedy for

Thursday, September 24, 2020

Venezuela’s broken oil industry is spewing crude into the Caribbean Sea

 This satellite image released by Maxar Technologies shows the FSO Nabarima oil tanker off the coast of Trinidad and Tobago, Sunday, Aug. 9, 2020. The oil tanker listing off a remote Venezuelan coastline is triggering international calls for action. Critics of President Nicolas Maduro and maritime experts say the FSO Nabarima is taking on water and could sink. (Maxar Technologies via AP)

This satellite image released by Maxar Technologies shows the FSO Nabarima oil tanker off the coast of Trinidad and Tobago, Sunday, Aug. 9, 2020. The oil tanker listing off a remote Venezuelan coastline is triggering international calls for action. Critics of President Nicolas Maduro and maritime experts say the FSO Nabarima is taking on water and could sink. (Maxar Technologies via AP) 

September 24, 2020 at 6:00 a.m. EDT

CARACAS, Venezuela — The sun had risen over the Caribbean Sea when Frank González spotted "the stain" — an oil slick on the water that stretched for miles.

“The sea looked like butter, because of the thickness of the water,” said González, a fisherman who saw the spill this month while working off the coast of Venezuela’s Falcón state. “It was painful to see.”

Venezuela’s once powerful oil industry is literally falling apart, with years of mismanagement, corruption, falling prices and a U.S. embargo imposed last year bringing aging infrastructure to the brink of collapse. As the government scrambles to repair and restart its fuel-processing capacity, analysts are warning that ruptured pipelines, rusting tankers and rickety refineries are contributing to a mounting ecological disaster in this failing socialist state.

Oil workers say the gushing crude soiling the coast of Falcón state this month came from a cracked underwater pipeline linked to attempts to restart fuel production at the aging Cardón refinery. Not far from the oil slick, fisherman say, is a jetting geyser of natural gas from a second broken pipeline.

“The gas leak looks like a boiling pot about to explode,” González said.

The leaks are the latest in a spate of oil industry troubles that have alarmed environmentalists here. They include a recent oil spill that has jeopardized corals and rare marine life off sensitive Morrocoy National Park, and a rusting vessel in the Gulf of Paria that observers call a ticking ecological time bomb. Analysts see a growing risk of more and larger spills in a country that has already suffered years of damage from broken wells and abandoned oil fields.

“Our fear is that as they try to fix and restart these refineries and oil centers, we’re only going to see more of this,” said Cristina Burelli, international liaison for SOSOrinoco, a nonprofit focused on environmental damage in Venezuela. “More underground oil pipelines are blowing up. The whole system is corroded and falling apart.”

A rash of gold mining — much of it illegal — has contributed to a surge of pollutants in the Venezuelan interior, endangering the important ecosystem at Canaima National Park, a UNESCO World Heritage site. And illicit logging has jeopardized rainforest. But in this OPEC nation that sits on world’s largest proven oil reserves, the biggest driver of environmental damage is the crumbling energy sector.

Particularly in recent years, a lack of spare parts, a brain drain of technicians and widespread corruption have crippled oil production and fuel refineries, making environmental accidents more common. Between 2010 and 2016, the state oil giant PDVSA was responsible for more than 46,000 spills of crude and other pollutants, according to the Caracas-based human rights group Provea.

In the Connecticut-sized Lake Maracaibo, thousands of wells now stand broken and useless, with raw crude and natural gas bubbling visibly to the surface. In 2016, the last year data was available, state engineers estimated that tens of thousands of gallons of oil were seeping into the lake each month.

The U.S. embargo on Venezuelan oil has deepened the industry’s woes. The country lacks the capacity to process much of its sludgy product. When it sent crude to the United States, it got back refined gasoline. The end of that system has worsened severe fuel shortages. The need to store extra crude that Venezuela cannot sell under the embargo, as well as the government’s attempts to revamp and restart old refineries to increase domestic fuel production, appear to be driving the recent spills, analysts and oil workers say.

The country’s diplomatic isolation has exacerbated the problem. The United States and more than 50 other countries consider President Nicolás Maduro a usurper; they recognize National Assembly President Juan Guaidó as the country’s rightful leader.

Unlike Mauritius, which recently called for international aid after a Japanese tanker spilled more than 1,000 tons of oil off its pristine coast, the Venezuelan government has few friends to turn to — and so has largely downplayed the spills.

“It breaks my heart,” said Julia Alvarez, a marine biologist here. “This is an ecological crime.”

Analysts began monitoring the first of the recent spills in August.

Eduardo Klein, director of the Remote Sensors Laboratory in the department of environmental studies at Simón Bolívar University, used satellite images to document a massive oil slick washing up on the beaches of Morrocoy National Park, a sensitive ecosystem of corals, sponges and sea turtles on the Caribbean coast. The images, he said, suggested the spill originated at refinery in Carabobo state.

“It can be seen without a doubt that there is a very large stain in front of El Palito refinery,” he said. “There is no way this stain had any other origin.”

Klein estimated the spill at 26,000 barrels of oil over 135 square miles, the largest in the area in at least 20 years.

According to local news reports, El Palito refinery suffered a failure at the end of July, when workers tried to reactivate it in an effort to refine fuel. Ivan Feites, an oil union board member, said the facility’s compressor pumps, turbines and pipes remain severely damaged.

“That’s what causes spills every time they try to restart the refinery,” Feites said. “The refinery doesn’t work and can’t produce fuel. It’s like a piece of cardboard that easily breaks.”

The Venezuelan government did not respond to a request for comment.

On the other side of the country, analysts and oil workers are growing increasingly concerned about the FSO Nabarima, a rusting vessel laden with 1.3 million barrels of crude that is taking on water in the Gulf of Paria. They fear the floating storage and offloading unit is at risk of sinking and creating a major environmental disaster in the Caribbean Sea.

Eudis Girot, head of the anti-government Unitary Federation of Petroleum Workers of Venezuela, posted photos on social media showing what he described as the ship’s already flooded engine room. In a video posted to social media, he begged Maduro to intervene.

“Take a helicopter,” he said. “Go out there. Do your own inspection.”

PDVSA confirmed the most recent oil spill, near its Cardón refinery. The oil giant said this month that the leak occurred in an underwater pipeline and cleanup was underway.


The Venezuelan government did not respond to a request for comment.

On the other side of the country, analysts and oil workers are growing increasingly concerned about the FSO Nabarima, a rusting vessel laden with 1.3 million barrels of crude that is taking on water in the Gulf of Paria. They fear the floating storage and offloading unit is at risk of sinking and creating a major environmental disaster in the Caribbean Sea.

Eudis Girot, head of the anti-government Unitary Federation of Petroleum Workers of Venezuela, posted photos on social media showing what he described as the ship’s already flooded engine room. In a video posted to social media, he begged Maduro to intervene.

“Take a helicopter,” he said. “Go out there. Do your own inspection.”

PDVSA confirmed the most recent oil spill, near its Cardón refinery. The oil giant said this month that the leak occurred in an underwater pipeline and cleanup was underway.

González, who grew up fishing with his uncle on the coast of Falcón, said he and other fisherman worry the spill will ruin their livelihoods. Environmentalists, meanwhile, say it could affect populations of dolphins, crocodiles, seabirds and green turtles.

“We have never seen a spill like this,” said González. “For years, no one has come to do maintenance on the refineries. Now it turns out that they are polluting everything with oil, and nobody seems to care.”

Faiola reported from Miami.

Wednesday, September 23, 2020

Oil Prices Rise After EIA Reports Crude Inventory Draw 

Crude oil prices reversed their decline today after the Energy Information Administration reported an oil inventory draw of 1.6 million barrels for the week to September 18. This compares with a draw of 4.4 million barrels for the previous week.

The report came a day after the American Petroleum Institute propped prices up temporarily by estimating a sizeable decline in gasoline stocks, coupled with a modest build in crude oil stocks. Analysts, on the other hand, had expected the EIA this week to report an inventory draw of 2.325 million barrels.

In gasoline, the EIA estimated an inventory draw of 4 million barrels for the week to September 18, compared with a decline of 400,000 barrels for the previous week. This also helped prices up.

Gasoline production averaged 9.3 million bpd last week, up on a week earlier, when gasoline output averaged just 8.8 million bpd.

In distillate fuels, which are giving refiners a headache as demand for them remains a lot more subdued than demand for gasoline, the EIA reported a draw in stocks of 3.4 million barrels. This compares to a build of 3.5 million barrels estimated for the previous week amid still severely limited air travel.

Distillate fuel production last week averaged 4.5 million bpd, compared with 4.4 million bpd a week earlier.

Oil prices were still down at the time of writing, with Brent crude trading at $41.69 a barrel and West Texas Intermediate trading at $39.70 a barrel. The decline is hardly a surprise: it came amid deepening worry about the future state of oil demand as economic reports from different parts of the world suggested that any recovery would be slow. It also came soon after the news broke that Libya was reopening some of its oil export terminals and boosting production.

OilX reported that plans were to raise production to 260,000 bpd, from currently below 100,000 bpd. In a precarious price environment, this production boost was bound to pressure prices despite OPEC+’s stated success with production cuts.

By Irina Slav for

Tuesday, September 22, 2020

OPEC Turns 60

 3 times the number "60" High-Quality adhesive, Black, Waterproof, 10 CM High, High-Performance film with no background, numbers, number, Wheelie Bin Rubbish bins, Uahlenaufkleber, House Number, Letter Box Sticker

The Fourteenth of September 2020 is a very special day for OPEC. This sees the Organization celebrate its 60th anniversary.

Few would have foreseen six decades ago that the Organization would have risen to the heights it has today in the global energy arena. Back then in Baghdad, the five Founding Fathers of OPEC, Juan Pablo Pérez Alfonzo of Venezuela; Abdullah al-Tariki of Saudi Arabia; Dr Tala’at al-Shaibani of Iraq; Dr Fuad Rouhani of Iran; and Ahmed Sayed Omar of Kuwait gathered together in the Al-Shaab Hall in Baghdad, to midwife OPEC into the world.

In the context of that time, when the oil industry was dominated by the major oil companies, which was reflected in its structure and behaviour, it was a heroic and pioneering act by the Founder Members to come together in the Iraqi capital.

The seminal ‘Baghdad Conference’, saw these five visionaries from the Founder Member Countries gather together around the premise of cooperation and with the need to write their own story. Pérez Alfonzo said after the meeting: “We are now united. We are making history.”  It would prove to be a profound statement.

In the 1960s, OPEC established itself with courage, persistence and diligence, through the development of its Statute that remains in place today, registering at the United Nations (UN) Secretariat on 6 November 1962, under UN Resolution No 6363, initiating a number of landmark decisions, such as the ‘Declaratory Statement of Petroleum Policy in Member Countries’ in 1968 and expanding its Membership.

Sixty years on, the Organization that is today 13 Member Countries is now an integral part of the international energy community and the multilateral system. It is widely consulted on oil industry affairs, remains firmly committed to secure and steady supplies and fair returns to investors, Member Countries run their own domestic oil sectors across the entire value chain, and the Organization has expanded its activities to champion issues affecting mankind as a whole.

In reflecting on this, Mohammad Sanusi Barkindo, OPEC Secretary General said: “I often think back to that day in 1960, the mood in Baghdad, how those visionaries envisaged the future of OPEC and the oil industry. What is clear is that what was set in motion has stood the test of time; OPEC still has the same core objectives, of order and stability in global oil markets, but its role has also broadened considerably, in terms of deeper cooperation with other producers, dialogue with a host of industry stakeholders, and an embrace of human concerns such as sustainable development, the environment and energy poverty eradication.”

The 60th anniversary is a time to reflect and appreciate the efforts of all those who have worked so hard throughout our history to make OPEC the resounding success it has become. This includes generations of Heads of State and Government, Ministers, Governors and other high-level experts from outside the Secretariat and, from within the Secretariat, Secretary Generals, Management and Staff of every relevant discipline.  They have all enriched the Organization, through commitment, perseverance and sacrifice, to cope with the many ups and downs experienced by OPEC and its Member Countries.

It is also an opportunity to, once again, extend the Organization’s gratitude to Austria and the City of Vienna, which have been warm and generous hosts to the Secretariat since OPEC moved to this grand, historic city 55 years ago.

To further celebrate the 60th anniversary, Iraq, the city of Baghdad and the Al-Shaab Hall plan to hold events, including music and cultural activities, albeit this is dependent on the COVID-19 pandemic. More details will be provided once available.

Looking ahead, the Organization stands ready to meet the many challenges we shall face as we enter the next 60 years of our history. We remain focused on a balanced and stable oil market, in the interests of both producers and consumers, as most recently exhibited through the Declaration of Cooperation and the historic production adjustments of 2020; further elevating dialogue and cooperation through the Charter of Cooperation; and providing options and solutions to some of the major challenges facing humankind, such as sustainable development and energy poverty alleviation.

Monday, September 21, 2020

Demand to Store a Glut of Diesel at Sea Is Rising Fast


Big oil traders are rushing to book tankers with a view to storing a glut of refined petroleum like diesel and jet fuel on the world’s oceans. The interest in floating storage of fuels, one of the clearest signs of oversupply, will be viewed with concern by many of the world’s oil refiners — especially those in Europe — who are dealing with the worst market in years for the two products because of the negative effect the coronavirus has had on demand.

Torm A/S, the world’s fifth largest owner of oil-products tankers, says inquiries for storage are increasing, while firms analyzing tanker movements say the amount of fuel being held at sea is rising. Glencore Plc, Vitol Group and Mabanaft Group booked tankers to store fuels. Trafigura Group hired about 12 supertankers with a view to possible storage last week. Most were for crude but some were for fuels.

“European demand is being weighed on by the threat of a second wave of Covid-19 across the continent,” said Jay Maroo, senior market analyst at Vortexa Ltd. “Interest for diesel floating storage looks set to rise.”

Covid Resurgence

The bookings come amid a resurgence in the number of new coronavirus cases which the International Energy Agency and OPEC expect will hit oil demand, serving as a reminder of chronic oversupply that led to traders storing millions of barrels of excess crude and fuels on tankers earlier in the year.

Torm says that interest in floating storage has centered on holding diesel in northwest Europe, and has the potential to tie up ships and support freight rates for vessels that would otherwise be competing to transport cargoes.

Likewise, tanker tracking data suggest some of the storage may well take place in northwest Europe. At least three U.S. diesel cargoes have been transferred to tankers floating in the North Sea this month instead of discharging into shore tanks.

Stockpiles of diesel-type fuel in land-based independent storage in Europe’s Amsterdam-Rotterdam-Antwerp trading hub have risen sharply in recent weeks to the highest in 13 months, according to Insights Global data. At the same time, inventories of distillate fuels including diesel in the U.S. Gulf are seasonally at their highest level since at least 1991, according to the Energy Information Administration.

Doing the Contango

Globally, the amount of diesel-type fuel held in floating storage jumped by about 10% in the first two weeks of this month, according to Vortexa. Jet fuel saw a similar increase, reaching 12.5 million barrels, the majority of which was being held off Europe’s coast.

Floating storage happens when the spot price of oil gets so depressed relative to later months that traders can buy cargoes, put them on ships, and sell them later at a profit — even after paying millions of dollars for vessel hire. That oil-market structure is called contango. For crude, contango-based floating storage often means hiring the industry’s biggest supertankers because they are typically cheapest on a per-barrel basis. For diesel — unless newly built carriers can be found — smaller tankers are more common.

The contango for diesel is deeper than it is for crude, according to ICE Futures Europe data compiled by Bloomberg. That means the incentive to store is likely greater. However, traders’ profits from doing so would probably be diminished by the relatively higher cost of booking smaller ships.

Even so, that’s not deterring some traders, adding to signs that the oil market continues to have a problem with diesel. The crack spread, the fuel’s premium to Brent, hit the lowest in at least nine years on Wednesday, according to ICE Futures data compiled by Bloomberg.

“Europe is still dealing with an oversupply of diesel,” Maroo of Vortexa said. “Tankers are still carrying product offshore, and the forward curve supports storage.”

Friday, September 18, 2020

Venezuela - Colombia / The most dangerous Border / How People Live

Venezuela and Iran defy U.S. sanctions with new tanker delivery

Oil condensate tanker "Honey" 

Oil condensate tanker "Honey"

(Bloomberg) --An oil tanker is discharging Iranian condensate for Venezuela as both countries continue to avoid U.S. sanction tripwires.

The ship, identified as Honey, turned off its satellite signal and started unloading about 2 million barrels of South Pars condensate at Venezuela’s state-controlled port of Jose on Saturday, according to a report and a person with knowledge of the situation.

The cargo will most likely be used by the state oil company Petroleos de Venezuela SA to blend with Venezuela’s tar-like crude and help prop up production in the Orinoco oil belt.

OPEC founding member Venezuela, owner of the world’s largest oil reserves, has been struggling to stave off a fall in production after U.S. sanctions cut off access to equipment and buyers for its oil. Output slumped to 339,000 barrels a day in July, the lowest level seen since the 1910s, according to OPEC and government data compiled by Bloomberg.

This is the first time Venezuela has imported crude from Iran, although it’s imported gasoline. It’s also the country’s first oil import since April 2019, when it got a parcel of Nigerian oil Agbami to mix with its heavy oil and produce flagship Merey 16, the country’s top exported blend.

Imports are used to offset Venezuela’s declining production of light oil, used to make Merey, or to act as a diluent and blend with viscous types of crude to make them more marketable.

Venezuela’s information ministry, PDVSA and Iran’s foreign ministry didn’t return calls and email seeking comment.

The U.S. has been ratcheting up sanctions, leaving little room for companies to work with the regime of President Nicolas Maduro.

Last month, the U.S. seized four tankers carrying Iranian gasoline bound for Venezuela in an unprecedented move by the Trump administration. The tankers were transporting 1.116 million barrels of petroleum, confiscated after help from “foreign partners,” the Justice Department said at the time.

After Russian companies Rosneft Trading SA, TNK Trading SA and Mexican Libre Abordo SA de CV cut ties with the regime, Caracas expanded business with Iran.

So far this year Tehran has supplied 1.5 million barrels of gasoline to PDVSA and food for the first Iranian supermarket in the South American nation.

A shortage of gasoline is forcing Venezuelans to queue for hours and even days, while Caracas is hit by rationing. The prospect of worsening fuel shortages and increased social unrest in the country has PDVSA grappling to revive a refining network crippled by years of mismanagement.

Thursday, September 17, 2020

OPEC and non-OPEC allies to review oil production cuts after dire demand warnings

Oil pumping jacks, also known as "nodding donkeys", are reflected in a puddle as they operate in an oilfield near Almetyevsk, Russia, on Sunday, Aug. 16, 2020. 

Oil pumping jacks, also known as “nodding donkeys”, are reflected in a puddle as they operate in an oilfield near Almetyevsk, Russia, on Sunday, Aug. 16, 2020.
Andrey Rudakov | Bloomberg via Getty Images

  • OPEC and non-OPEC allies, sometimes referred to as OPEC+, will convene for an online meeting to review the market and discuss compliance with deep production cuts.
  • Analysts do not anticipate OPEC+ to announce further output cuts on Thursday, though the issue of compliance is likely to resurface amid signs some exporters may have reneged on their commitments.
  • The meeting comes shortly after OPEC and the IEA, two prominent forecasters, trimmed their 2020 outlook for oil demand.

LONDON — A group of some of the world’s most powerful oil-producing nations on Thursday will meet to review production policy, amid a faltering recovery from the pandemic-driven rout and a bleak outlook for energy demand.

OPEC and non-OPEC allies, sometimes referred to as OPEC+, will convene for an online meeting to review the market and discuss compliance with deep production cuts.

The energy alliance agreed in July to cut output by 7.7 million barrels per day from August through to December, in an effort to prop up oil prices by limiting supply. Iraq and others also pledged to pump below their quotas in September to offset overproduction earlier in the year.

Analysts do not anticipate OPEC+ to announce further output cuts on Thursday, though the issue of compliance is likely to resurface amid signs some exporters may have reneged on their commitments.

OPEC kingpin Saudi Arabia and non-OPEC leader Russia, the two biggest producers in the alliance, have both pushed for full conformity in recent months.

Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman has previously used OPEC meetings to publicly press recalcitrant members to stick to the pledged output cuts.

International benchmark Brent crude traded at $42.04 a barrel on Thursday afternoon, down over 0.4%, while U.S. West Texas Intermediate crude stood at $39.87, more than 0.75% lower.

Oil prices have dropped more than 35% since the start of the year.

“I do not believe we should expect any material change of course out of the OPEC meeting this week when they review market fundamentals, in part because compliance with previously agreed production cuts has been high,” Tim Bray, senior portfolio manager at GuideStone Capital Management, told CNBC via email.

“It might set the stage for action at future meetings, however,” Bray said.

Demand outlook

“Once again, OPEC+ meets against a worrying backdrop of soft global oil prices and an uncertain demand outlook,” Cailin Birch from The Economist Intelligence Unit told CNBC via email on Thursday.

“We maintain our view that Brent crude prices will average just over $42 a barrel in 2020, assuming that OPEC+ partners reconfirm their commitment to output cuts at their September meeting,” Birch said.

The meeting comes shortly after OPEC and the IEA, two prominent forecasters, trimmed their 2020 outlook for oil demand.

OPEC warned on Monday that risks would likely “remain elevated and skewed to the downside,” while the IEA said on Tuesday that the path ahead would be “treacherous” amid weakening sentiment and an upsurge in the number of coronavirus cases reported worldwide.

Separately, U.K.-based energy giant BP said on Monday that demand for oil may have peaked in 2019. The company laid out three scenarios for energy demand over the next 30 years, all of which predicted a decline for oil demand through to 2050.

Two of the scenarios, in which policymakers impose more aggressive measures to significantly reduce carbon emissions, would see oil demand fail to fully recover from the coronavirus crisis.

“It remains to be seen whether the make-or-break year-end period will provide the glutted oil market with a much-needed reprieve,” Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note.

“What is certain is that skepticism over the oil rebalancing will endure so long as the world continues to grapple with the Covid crisis,” Brennock said.

Compliance quotas

“Saudi Arabia’s efforts to secure higher compliance delivered results in August, with Iraq even partially delivering the promised ‘catch-up’ cuts … and Nigeria moving closer to full compliance,” Richard Bronze, co-founder of Energy Aspects, said in a research note.

The United Arab Emirates, traditionally a loyal partner to OPEC kingpin Saudi Arabia, emerged as a major laggard in delivering oil output cuts last month, Reuters reported on Wednesday, citing OPEC+ data.

The country has since said it will reduce oil supply in the coming months to compensate for pumping above its agreed limit in August.

Output from Iraq and Nigeria, respectively, was expected to remain low in September, Bronze said, then rise from October. “While OPEC+ will track how fundamentals and prices respond, we do not sense an appetite for deeper cuts,” he added.

Wednesday, September 16, 2020

OPEC at 60: An oil cartel on life support

OPEC headquarters

The 13-member bloc of oil-rich nations is turning 60 amid a pandemic that's jeopardizing its very existence. Waning influence and a global shift to cleaner energy sources mean that OPEC's glory days are over. 

In 1973, a handful of oil-rich countries, led by Saudi Arabia, Iran and Iraq, brought the mighty US economy to its knees by slapping an oil embargo on Washington and its allies. The suspension of oil shipments from the Middle East to the US and steep production cuts in retaliation for the Americans' support of Israel during the Yom Kippur War wreaked havoc on the US economy, leading to fuel shortages and causing oil prices to go through the roof.  

The ban was lifted within months following hectic negotiations, but not before it pushed the US economy into its worst recession since World War II. The Organization of Petroleum Exporting Countries (OPEC), which until then had maintained a relatively low profile, mainly negotiating higher oil prices from major oil companies for its members, had emerged as a force to reckon with. 

Nearly five decades later, OPEC remains only a pale shadow of its past glory, weakened by infighting within its ranks, the rise of the United States as a major oil exporter thanks to a shale boom, and a global push for renewable sources of energy amid climate change worries.  

"OPEC is significant primarily as a political club. It fails economically as a cartel, but it does boost the prestige and standing of its members, most of whom would not otherwise have a seat at the table in world affairs," said Jeff Colgan, a professor at Brown University who authored the book Petro-Aggression: When Oil Causes War. "A functional cartel needs to set tough limits to production and stick to them. OPEC sets easy targets and still often fails to meet them," he told DW.

The bloc has seen its market share progressively diminish over the years, in part thanks to its efforts to artificially boost oil prices by holding back its own production. OPEC's share of the global oil market has fallen to around 30% from above 50% in 1973. It has also been hurt by involuntary losses in war-torn Libya and the fallout from US sanctions in both Iran and Venezuela

It was OPEC's weakness amid the rise of the US as a major oil producer that prompted the once exclusive club to join hands with Russia and some other oil producers to form OPEC+ and attempt to balance the oil markets. The alliance's inception in 2016 was preceded by a disastrous campaign by the Saudi-led bloc to force weaker US shale players out of business, which caused oil prices to collapse to around $30 (€25) a barrel. US shale players then proved to be more resilient than the Saudis had expected — strong enough to push the US to become the world's biggest oil producer.  

Peak oil debate heats up amid COVID-19 crisis 

The bloc's waning influence has coincided with oil's fall from grace. The fossil fuel has seen its share in the global energy mix diminish to about 33% from a peak of 50% in 1973, according to estimates by BP, as governments and companies shift to cleaner energy sources to combat climate change. By contrast, renewables, mostly from solar and wind, have seen their share rise, accounting for over 40% of global energy growth last year, according to BP's data. 

"Oil isn't as significant or visible as it used to be. For example, do you know who the head of Exxon is? Probably not. Do you know who the head of Tesla is? Yes, Elon Musk," said Philippe Benoit, from consultancy Global Infrastructure Advisory Services 2050. 

The COVID-19 pandemic has further dimmed oil's prospects. Global lockdowns brought cars, planes and trains to a screeching halt, causing oil consumption to drop by a quarter and oil prices to crash to multiyear lows, even trading below $0 a barrel in the US at one point. Transportation accounts for close to a third of the global oil demand. 

Experts don't see the automobile and aviation sectors returning to their pre-pandemic levels for the next 3-5 years at least. The airline industry was touted to be the biggest growth engine for oil, riding on demand from people getting richer, but that now looks unlikely, especially over the next few years. 

Oil industry leaders, including BP's chief executive, Bernard Looney, and Royal Dutch Shell's boss Ben van Beurden, have said the current crisis may cause the oil demand to peak sooner than expected.      

"The backdrop of declining demand means that the Kingdom [of Saudi Arabia] and its Gulf allies would find it increasingly difficult to manipulate supply and boost prices for any length of time," Jason Tuvey, of Capital Economics, wrote in a note to clients. "If prices are kept artificially high for an extended period, oil demand will end up declining at an even faster pace and the nimbleness of US shale production means that non-OPEC supply will expand." 

'OPEC is a Saudi mouthpiece' 

OPEC was founded in Baghdad in September 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The bloc, which has expanded and contracted over the years, has been plagued by squabbles over strategy and regional power struggles, which have occasionally turned into full-blown conflicts like the Iran-Iraq war and Iraq's invasion of Kuwait in 1990. 

Saudi Arabia, which produces a third of OPEC's oil, has remained the de facto leader of the bloc since the 1990s, when conflicts, corruption and poor management wrecked production in other member countries, including regional rivals Iran and Iraq.  

Riyadh has oscillated between propping up crude oil prices and shielding its market share, often unilaterally. "OPEC is a Saudi mouthpiece," Colgan said. In March, when OPEC+ negotiations to cut output in response to the pandemic collapsed, Saudi Arabia launched a price war against Russia — much to the dismay of weaker OPEC members such as Nigeria and Angola, already bleeding due to low oil prices caused by Riyadh's 2015-16 misadventure. 

Despite all its sway, Saudi Arabia has struggled to rein in the bloc's so-called cheaters, including Nigeria and Iraq, which have been notorious for failing to comply with pledged output cuts aimed at propping up oil prices. Riyadh, which is more vulnerable to low oil prices than other major oil producers with its break-even oil price exceeding $80 a barrel, has ended up doing much of the heavy lifting to ensure overall compliance.  

Tuvey of Capital Economics says in the medium-term Saudi Arabia will scale back its efforts to prop up oil prices and revert to the strategy of shielding its market share at any cost to avoid leaving substantial quantities of oil stranded amid falling demand.  

"Such a shift in policy, particularly if it were sudden and unexpected, would put some downward pressure on oil prices. But this is unlikely to be too troubling for the kingdom, and the government has proven its willingness to impose harsh fiscal austerity," Tuvey said. "Saudi policymakers won't have much sympathy for other producers that fail to adjust their economies to low oil prices."  

Bigger role for OPEC? 

Yet it may be too early to write an obituary for the bloc, which has survived many crises in the past 60 years, eliciting comparisons to the proverbial cat with nine lives. Oil is likely to remain the world's most important commodity for years to come. 

"Paradoxically, OPEC as an aggregator, a point of meeting for many producing nations, could potentially play a bigger role in managing the tensions of a contracting market among those oil producers," Benoit said.

Monday, September 14, 2020

Mexico to Present Projects Open to Private Capital as it Moves to Undo Energy Reform

Mexico oil, gas and products pipelines map - Click on map to enlarge

Mexico will present a set of infrastructure projects in the energy sector where private companies will be invited to participate, while it prepares to undo the energy reform conducted by the previous administration.

Mexico will announce a set of infrastructure projects before Sept. 15, when Mexicans celebrate Independence Day, President Andres Manuel Lopez Obrador said Sept. 7. The joint plan between the government and the private industry to reactivate the economy had originally been announced in November.

According to a presentation filtered to the press, which presumably originated in the office of the presidency, the government’s announcement will consist of 168 projects worth roughly $44.4 billion where the private industry will provide over 50% of equity.

The announcement comes at a time when lawmakers from the president’s party prepare to discuss a series of changes to the constitution that would effectively undo the energy reform carried out by former President Enrique Pena, which opened up the sector to private investment after over seven decades of monopoly.

Senators from Morena, the party formed by the president and which currently has majority in both Houses of Congress, will discuss modifications to undo the 2013 energy reform, according to the party’s legislative agenda for the next period, which began on Sept. 1 ends in January. The plan includes changes to Mexico’s Hydrocarbon’s law, Pemex’s internal rules, the law of the energy regulators and the law for hydrocarbon revenues, the agenda shows.

The main goal of the modification is to strengthen Pemex and CFE, the state hydrocarbon and power companies, respectively, for them to become economic engines for the country, the president has repeatedly said.

The energy reform allowed private companies to participate in all areas of the energy sector for the first time in over 70 years and attracted over $200 billion in committed investments, including power generation and oil exploration.

Undoing of energy reform

Lopez Obrador has touted with the idea of modifying the constitution to undo the energy reform for many years and even used it as a presidential campaign promise. Yet since he took office in December 2018, he promised to wait until his third year in office to do so.

Sources have told Platts in recent months they see limits to the changes the current administration can make, because modifying many laws is a complex political process that needs coordination and therefore many of them expected the changes next year, after next year’s elections, which could add strength to the president’s party.

In July, Mexico will renovate the lower House of Congress as well as 13 out of the 32 governorships in the biggest election process in modern history.

Sources have also said undoing the reform is hard because many of the rules of the market are also included in the recently signed United States-Mexico-Canada Agreement.

Modifying the constitution to achieve something similar to what the president has mentioned is clearly against the treaty, said Rosanety Barrios, an independent consultant who helped implement the 2013 reform as public official.

“The goals of the administration would imply closing the market to private investments and even expropriations, which is against the treaty,” she said.

The Mexican energy sector and its investments are part of the USMCA and all the other trade treaties Mexico has signed, said Guillermo Zuñiga, a US-based consultant during a Sept. 8 webinar organized by Mexico Evalua, a Mexico-based think-tank, during the presentation of their recent report on Pemex and CFE.

However, many participants consider this administration does not need to change the law.

“The president has managed to dismantle the market without changing a coma in the constitution,” said Miriam Grunstein, founder partner at Mexico-based Brilliant Energy Consulting during a Sept. 7 webcast webinar on the future of the Mexican oil industry.

Energy projects

The government has cancelled oil rounds and long-term electricity auctions; it has stopped issuing new import permits for gasoline importers; it has issued new regulations to curb the participation of private power generators and has captured regulators to benefit Pemex and CFE, prompting international criticism.

At least three regulators have acted in ways that resulted in some sort of benefit in favor of Pemex or CFE in recent months, Mexico Evalua’s report shows.

Pemex and CFE representatives did not respond to requests for comment.

Mexico could present 23 energy projects

Among the 168 infrastructure projects the government could announce, there are 23 related to the energy sector, the filtered presentation shows. Sources said that if the presentation were real, the announcement would be disappointing as many of the projects have been on the table for years, at least on paper and only two of the projects have some advancement. Others think it is unlikely to be presented.

The plan includes three combined-cycle power plants, three natural gas pipelines, three fuels storage terminals, two LNG export terminals and one coker unit, the presentation shows. 

Friday, September 11, 2020

Never Forget 9/11/2001 / God Bless NYC & God Bless America!


Tanker carrying gasoline seized by U.S. arrives off Freeport, Texas


HOUSTON (Reuters) - A tanker containing a cargo of Iranian gasoline confiscated by the United States arrived on Wednesday at a Texas port where it was preparing to discharge, according to a pilots group spokesperson.

The Euroforce arrived off of Freeport, Texas, on Wednesday and had retained Texas Marine Agency, a Houston-based cargo agent, in preparation to offload its fuel, the spokesperson for Brazos Pilots Association said. Texas Marine referred inquiries to the U.S. Department of Justice.

The United States government last month said it seized fuel from Iran-linked tankers that was bound for Venezuela, part of Washington’s efforts to disrupt trade between Venezuela and Iran.

The fuel was transferred to the Euroforce and Maersk Progress, two large tankers, according to data and sources. The Maersk Progress is due to arrive in Houston later this month.

A DOJ spokesperson did not immediately reply to a request for comment. In August, the DOJ said the fuel seized had been bound for Venezuela and was then in U.S. custody. (

The Euroforce was carrying about 640,000 barrels of gasoline when it arrived in Freeport, according to Refinitiv Eikon tanker tracking data. A port of Freeport spokesman said the vessel was not scheduled to be unloaded at the port’s public docks and likely would be handled by one of two private docks.

Owners of four Iranian fuel cargoes have challenged the seizure in a U.S. District Court, asserting their rights to control the cargoes, which they said were bound for customers in Peru and Colombia.

Venezuela, which has the world’s largest crude oil reserves, is rationing gasoline leaving residents in long lines at service stations. Three fuel tankers that left Iran in August are on their way to the South American nation.

Reporting by Gary McWilliams, Jonathan Saul and Marianna Parraga; Editing by David Gregorio