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Supply may struggle to keep up with demand in 2023: IEA

  • Spanish Market: Crude oil, Oil products
  • 15/06/22

The IEA expects a resurgent China to help drive an acceleration in global oil demand growth next year, leaving consumption more than 1mn b/d higher than pre-Covid levels and supply struggling to keep pace as sanctions tighten on Russia.

In its first projection for 2023, the Paris-based energy watchdog forecasts global oil demand will increase by 2.2mn b/d to 101.6mn b/d, following on from a 1.8mn b/d rise in 2022.

Whereas this year's growth is underpinned by advanced economies emerging from the pandemic, next year's gains are driven by China, with Asia-Pacific as a whole accounting for three-quarters of the projected 2.2mn b/d increase.

"While underlying economic growth is forecast to remain subdued in 2023, resurgent Chinese oil consumption will more than compensate for a slowdown in OECD oil demand next year," the IEA said in its latest Oil Market Report (OMR).

Rising demand for jet fuel and petrochemical feedstocks LPG and naphtha will dominate growth in 2023, and much of this results from "a robust recovery in Chinese demand following the severe Covid-19 disruptions of 2022".

Supply may struggle to keep pace with demand next year, the IEA said, pointing to tougher sanctions on Russia and an eroding spare capacity cushion within the rest of the Opec+ group. The agency sees producers outside the Opec+ bloc adding 1.9mn b/d of supply in 2022 and a further 1.8mn b/d in 2023, with the US accounting for 60pc of the non-Opec+ gains next year.

In contrast, supply from Opec+ could fall in 2023 as sanctions shut in Russian output and Opec+ production declines outside the Middle East.

"While the bloc's output could expand by 2.6mn b/d this year as record 2020 supply cuts are unwound, it is poised to contract by 520,000 b/d next year if Russia's production trajectory follows the path set in motion by international sanctions levied in response to Moscow's invasion of Ukraine," the IEA said.

The IEA acknowledges Russian production has held up better than it expected. The agency's initial prediction that as much as 3mn b/d of Russian oil output could be forced offline from April proved way off the mark. By its own estimates, last month's Russian liquids output was only 850,000 b/d below pre-invasion levels.

The IEA said it expects Russian production to hold steady this month before starting to decline gradually as the EU's embargo is phased in.

"By the start of next year, we expect to see close to 3mn b/d shut in," it said.


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05/02/25

Equinor scales back renewables plan

Equinor scales back renewables plan

London, 5 February (Argus) — Norwegian state-controlled Equinor said today it has cut by up to 25pc its target for renewables capacity by 2030, and abandoned a plan to allocate half its capital expenditure (capex) to low carbon projects by that same year. The company has cut its 2030 expected renewables capacity to 10-12GW, from 12-16GW, noting that the pace of the energy transition is slower in some markets. It did not give a new target for capex allocation to this sector. Equinor also modified some net carbon intensity goals, setting ranges rather than absolute targets. It now plans to reduce net carbon intensity — which includes scope 3 emissions, from sold products — by 15-20pc by 2030 and by 30-40pc by 2035, from a 2019 baseline. The previous targets were at the higher end of these ranges. Equinor made a profit of $8.83bn in 2024, down by 26pc on the year. Profit was $1.99bn in the fourth quarter, lower on the year by 23pc. The company's oil and gas output was slightly lower in 2024, with a small increase in gas production not quite offsetting lower liquids output. Equinor's equity liquids production was 1.08mn b/d of oil equivalent (boe/d) in 2024, down by 3pc on the year, and its equity gas production rose by 2pc to 985 boe/d over the same timeframe. It expects "more than 10pc growth from 2024-27" in oil and gas production, and estimated that hydrocarbons output would grow by 4pc from 2024 to 2025. Liquids and gas prices fell in 2024. Equinor's reported Norwegian and US gas prices rose by 5pc and 26pc, respectively, on the year in the October-December period, but this was not enough to assuage a decrease across the year. The average reported price for its Norwegian gas dropped by 22pc on the year to $9.47/mn Btu in 2024, and the average reported price for its US gas decreased by 4pc to $1.70/mn Btu. Equinor reported an average liquids price of $74.1/bl in 2024, 1pc lower on the year. Its reported fourth-quarter 2024 liquids price fell by 10pc from the same period in 2023, to $68.5/bl. Equinor's power generation rose in 2024, boosted by additions in Brazil and Poland in 2023 and the start of the 531MW Mendubim solar plant in Brazil in 2024. Equinor's share of power generation stood at 4,917GWh in 2024, up by 19pc on the year — but its renewables share rose faster, by 51pc to 2,935GWh. Equinor has maintained its target of 30mn-50mn t/yr of CO2 storage by 2035. Equinor trimmed 600,000 t/CO2 equivalent (CO2e) from its absolute scope 1 and 2 — or operational — emissions over 2023-4. Scope 1 and 2 emissions from its operated production stood at 11mn t/CO2e in 2024. The company's upstream carbon intensity fell to 6.2kg CO2/boe in 2024, down by 7.5pc on the year. Equinor will buy back $5bn of shares in 2025, having bought $6bn in 2024. It completed the fourth $1.6bn tranche of its 2024 programme on 14 January and will launch the first tranche — of up to $1.2bn — of its 2025 programme on 6 February. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trump proposes US take control of Gaza


05/02/25
05/02/25

Trump proposes US take control of Gaza

Washington, 4 February (Argus) — US president Donald Trump on Tuesday called for the US to take over Gaza, relocate the population of more than 2mn to other countries and then redevelop the enclave. Meeting with Israeli prime minister Benjamin Netanyahu at the White House, the one-time real estate developer sketched out a plan in which the US would "own" Gaza, level what has become a "demolition site" and remake the territory into the "Riviera of the Middle East". Assuming such a role would embroil the US far more deeply in what has been the deadliest conflict in the region in decades. Asked whether US troops would be involved in his plan, Trump said: "If it's necessary, we'll do that." Trump did not say where, exactly, the Palestinians from Gaza would be relocated, although he said he had a "feeling, despite them saying no" that Jordan's King Abdullah and Egyptian president Abdel Fattah el-Sisi "will open their hearts and will give us the kind of land we need to get this done". Trump said the only reason people want to return to their homes in Gaza is because they believe they have no alternative. Instead, they could be relocated and "live in comfort and peace". And after the rebuilding is completed, people from "all over the world" would live in the new Gaza — "Palestinians also," Trump said. Netanyahu praised Trump for his "willingness to puncture conventional thinking" and to propose ideas that could reshape the Middle East. "You cut to the chase," Netanyahu told Trump during the press conference. "You see things others refuse to see. You say things others refuse to say. And after their jaws drop, people scratch their heads. And they say, ‘You know. He's right.'" But Saudi Arabia's foreign ministry, in an apparent reaction to Trump's proposal, Tuesday argued the international community has a responsibility to alleviate the suffering of the Palestinian people "who will remain steadfast on their land and will not move from it". By David Ivanovich Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Chinese UCO fate sealed long before tariffs


04/02/25
04/02/25

Chinese UCO fate sealed long before tariffs

New York, 4 February (Argus) — Broad US tariffs on Chinese imports that took effect today may reshuffle trade flows between the world's two largest economies, but demand for the once-pivotal US biofuel feedstock Chinese used cooking oil (UCO) was already waning. China exported 2.7bn lbs of UCO into the US over the first 11 months of 2024, more than any other foreign supplier, up from 1.6bn lbs in 2023 and just 100,000 lbs in 2022, according to US customs data. Clean fuel standards in states like California, Oregon, and Washington, along with a federal tax credit that rewards biofuels that produce fewer greenhouse gas emissions, spurred refiners to look beyond domestic supply and import low-carbon wastes from abroad. The US' new 10pc tariffs on Chinese imports could discourage further imports, since US refiners have a range of feedstock options for renewable diesel and sustainable aviation fuel (SAF) production. The US trade representative did not immediately confirm the tariff rate for UCO, but there was already an 8pc tariff on UCO from all origins and an additional 7.5pc tariff on China-origin UCO before even factoring in the new surcharge on all imports. Both countries have also recently taken steps to curb Chinese UCO exports, making further growth in UCO trade less likely, even if tariffs go away. China late last year cancelled a 13pc export tax rebate for UCO, reducing a key incentive to send the feedstock abroad at a time when the country is aiming to use more SAF domestically. The administration of former president Joe Biden then took steps to cut off US demand, closing off opportunities for fuels derived from foreign UCO from claiming a tax credit crucial for production margins. That incentive, known as "45Z," offers increasingly generous subsidies to fuels as they produce fewer emissions, which was initially expected to benefit refiners sourcing UCO over first-generation crop feedstocks. But the new government emissions model that road fuel producers must use to claim the credit for now offers no pathway for fuels derived from foreign UCO. The US Treasury Department justified the restriction by saying it had "significant concerns" about distinguishing imported UCO from palm oil, which is ineligible for 45Z. The guidance is only preliminary, meaning President Donald Trump will have the final say on how the government enforces rules around the credit. But the new administration is likelier to pursue even more sweeping restrictions on foreign feedstocks, which Republican lawmakers have argued are hurting demand for US crops that can also be refined into fuel. Republicans could use budget legislation this year to change the credit too, and key lawmakers on the House tax-writing committee have already floated potential restrictions on foreign feedstocks. There are some caveats to US biofuel markets that mean UCO imports will not entirely go away absent more muscular trade restrictions. US biofuel producers with foreign UCO on hand can still sell into state low-carbon fuel standard markets like California, which have not restricted the feedstock. And the current guidance around 45Z allows producers of SAF — but not road fuels — to use an alternative lifecycle emissions model known as CORSIA, which does not restrict any sources of UCO. Valero senior vice president Eric Fisher said last week on an earnings call that the current restrictions on road fuels derived from foreign UCO claiming 45Z would not affect Diamond Green Diesel, the refiner's joint renewable fuels venture with Darling Ingredients. Foreign UCO has "always" been directed to meet SAF demand in Europe and the UK, Fisher said, and the recent guidance "does not really change what we were going to do strategically with that feedstock." Europe and the UK have 2pc SAF mandates starting this year, though requirements do not become significantly more stringent until 2030. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Mexican peso volatility persists despite tariff delay


04/02/25
04/02/25

Mexican peso volatility persists despite tariff delay

Mexico City, 4 February (Argus) — The Mexican peso remains volatile despite a bump from the last-minute deal postponing US President Donald Trump's threatened 25pc tariffs on Mexican imports, financial analysts said. The US agreed Monday to delay the tariffs for one month after discussions between Trump and Mexican President Claudia Sheinbaum. In return, Mexico pledged to deploy 10,000 National Guard troops to its northern border to combat drug trafficking, with a focus on fentanyl. The peso initially reacted positively to the news, strengthening by nearly 3pc late Monday after the agreement was announced. Still, today the Mexican peso weakened 0.4pc to Ps20.5 to the dollar by the end of trading, according to data from Mexico's Central Bank (Banxico). The peso has depreciated 16.6pc against the dollar from a year ago, according to Banxico data. The currency will remain volatile until there is greater clarity on whether tariffs will ultimately be imposed and at what level, BBVA Mexico bank analysts said in a note. If the US proceeds with a 25pc tariff, the peso could weaken to Ps24/$1, pushing Mexico's economy into a 1.5pc contraction this year, according to the bank. A lower 10pc tariff would be more manageable, BBVA Mexico added, as peso depreciation would offset some cost increases for US importers. In that scenario, Mexico's economy could still grow by 1pc in 2025. "Markets have debated whether to take Trump's policy promises seriously but not literally, or both seriously and literally," Barclays analysts wrote in a note to investors. Barclays also noted that the US sees itself as having the upper hand in any trade war, as a far greater share of Canadian and Mexican exports depend on US demand than vice versa. Mexico's state-owned oil company Pemex typically benefits from peso depreciation because of its US dollar-denominated crude exports, which help offset higher fuel import costs. "Pemex's revenues are tied to international oil prices, providing a natural hedge," the company said in its latest earnings report. However, analysts warned that Pemex's shift toward domestic refining over exports could reduce this buffer, leaving the company more vulnerable to foreign exchange swings, particularly as it carries a large dollar-denominated debt load. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Engie converts Chile diesel plant to renewables


04/02/25
04/02/25

Engie converts Chile diesel plant to renewables

Santiago, 4 February (Argus) — French utility Engie has started commercial operations at its 68MW Tamaya battery energy storage system (BESS) on the site of its former diesel-fired power plant near Tocopilla in northern Chile's Antofagasta region. BESS Tamaya will store electricity generated by the 114MW Tamaya photovoltaic (PV) plant on the same site, which began operations in February 2022. The company is "repurposing the site to give it a second life and continue contributing to the local economy," said Engie Chile chief executive Rosaline Corinthien. BESS Tamaya consists of 152 lithium battery containers with a storage capacity of 418MWh. It will be able to supply 50,800 homes over five hours of peak demand. Engie is also constructing the 116MW Tocopilla BESS operation at its former Tocopilla coal and fuel oil-fired power complex in the same region. It disconnected the complex from the grid in September 2023. Engie is the fourth-largest generator in Chile with 2.6GW of installed capacity. Its BESS portfolio consists of 2GWh in operation and construction. The conversion of fossil fuel-fired plants is part of Chile's decarbonization plan to ensure a "just" energy transition, providing new sustainable economic activity for communities. Since 2019, Chile has withdrawn 11 coal plants for a combined 1.7GW and is committed to closing the remaining 17 coal plants by 2040. By Emily Russell Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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