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By David Gaffen, Editor, Energy Markets

Hello Power Up readers! The oil market freaked out a bit after OPEC surprisingly cut production a few weeks back, and it has since then been steadily giving that rally away, to the point where things are pretty much back to where they were. The market will see what happens next as summer driving season approaches, and meantime, Russia has a new outlet for its crude. Let’s take a look.  

Today’s top headlines:

• Oil prices at three-week low as firmer dollar, rate hikes weigh
• Biden administration sees year-round sales of higher ethanol fuel by 2024
• EXCLUSIVE: Pakistan makes first purchase of discounted Russian oil

People on motorcycles waiting to get petrol in Karachi, Pakistan. REUTERS/Akhtar Soomro

Pakistan has placed its first order for discounted Russian crude oil after Islamabad and Moscow reached an agreement for purchases, as Asif Shahzad reports here. The first cargo will dock at Karachi’s port in May (which is frankly a very long way journey).  

Pakistan is looking to buy as much as 100,000 barrels per day (bpd) of oil if the first transaction goes well, according to Petroleum Minister Musadik Malik, who spoke to Reuters about the deal. The deal will give Russia another buyer for its crude after it stepped up its oil sales to India and China following sanctions from Europe and the United States after Russia invaded Ukraine last year.  

The South Asian nation imported 154,000 bpd of oil in 2022 – so if Russia were to supply 100,000 bpd, that would displace its normal seller, Saudi Arabia, along with United Arab Emirates.  

What’s in your gas tank? It may change! REUTERS/Bing Guan

The two biggest U.S. oil companies are road-testing new gasoline blends that they say will bring down emissions at levels that would compete with electric vehicles, as Sabrina Valle reports here, but it could be years before those fuels come to fruition.  

For the most part, sustainable fuels like sustainable aviation and lower-carbon gasoline have been a drop in the bucket in terms of their market share and are probably still a long way away from becoming viable as a real part of market share. There are quite a few issues here – gasoline made out of soybeans or other non-fossil feedstocks are costly and the raw materials just aren’t as abundant as, say, crude oil. Still, if this were to work, it could extend the life of the gasoline market, which is important given gas-powered vehicles make up the majority of the road fleet.  

“We really believe there has to be alternatives for the light duty vehicle,” Chevron President of Americas Products Andy Walz said at an event on Wednesday to road test the fuel. “Electrification is not the only answer.” 

At the same time, European automaker Stellantis said it is finalizing testing of eFuels on certain engines to see if they can reduce overall emissions from their vehicles on the road.  

A solar powered boat of DHL package delivery service, a division of German post operator Deutsche Post, along the Spree river in Berlin. REUTERS/Lisi Niesner

Germany, the largest economy in Europe, is trying to shift to where 80% of its electricity consumption is covered by renewables by 2030 – but that ambitious target is running into the reality that it needs more than 200,000 people to expand solar and wind power, as Maria Martinez and Riham Alkousaa report here.  

“We can keep up with orders, but the shortage of workers is a problem because we have to hire basically anyone,” Wolfgang Gruendinger, spokesperson for Berlin-based solar company Enpal told Reuters.   

The German government is trying to encourage vocational skills that will boost the training for craftspeople who can work in these industries; still, some universities are short of enough people in graduate programs for engineering as well.  

Refining in China. 

China may cut quotas for refined oil products exports as domestic demand is improving, lessening the need to boost its economy through more exports, as Trixie Yap and Andrew Hayley report here. 

China for a time had boosted export quotas when the worldwide markets tightened, necessitating more refining runs from the world’s largest importer of crude oil. The gas oil markets are now pretty oversupplied, and that’s hit Asian refining margins in a big way. The refiners are now expected to focus more on domestic sales.   

Refiners are building stocks ahead of peak refinery maintenance later in second quarter in preparation for improving demand in the third quarter during summer, traders added. 

“It’s difficult for us to sleep at night without power, and it is even more painful after fasting all day.”

Munna Khan, who lives outside Bangladesh’s capital of Dhaka. The country has been forced to cut power to millions during a relentless heatwave

Western Balkan nations are seeing solar energy investment boom, but the transmission systems aren’t ready, as Daria Sito-sucic and Ognien Teofilovski report here. One good example comes out of North Macedonia, where investors are quickly ramping up on solar development – as the country is turning into a hub for renewable energy in the region.  

But that’s an issue when it comes to transmission, according to Marko Bislimovski, the president of North Macedonia’s Energy Regulatory Commission. Since 2021, solar parks with 139-megawatt (MW) capacity have been built, while up to 300 MW of new solar energy is planned to be produced by end-2023. But Bislimovski says the grid isn’t ready to deal with the intended expansions.  

“Our grid can afford the transmission of about 1,300 MW of photovoltaic energy and distributive network has capacity for 700-800 MW while there is a plan for transmission of 5,000 MW,” Bislimovski said. “So we have problems.” 

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