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Hello Power Up readers! The oil markets are getting squeezed once again, after several weeks where prices sagged. There’s a big pipeline closure in the Middle East, and U.S. oil and gas execs say the environment for drilling right now is pretty lousy. Take all that together, and there’s a recipe for a rally.  

“I never had any friends later on like the ones I had when I was twelve. Does anyone?” (Iraqi-Turkish pipeline, Iraqi Kurdistan province). REUTERS/Ari Jalal

Iraq has halted daily exports of roughly 450,000 barrels of crude that come out of the semi-autonomous Kurdistan region and northern Kirkuk fields this past week, as Rowena Edwards reports, after the country won a longstanding arbitration case against its neighbor Turkey.  

That’s roughly one in every 20 barrels of oil being delivered on a daily basis and it puts that production at risk. How did this happen? It relates to a decision last week on a case dating to 2014, as back then, Iraq claimed that Turkey violated a joint agreement by allowing the Kurdistan Regional Government (KRG) to export oil through a pipeline to the Turkish port of Ceyhan, which Baghdad sees as illegal. 

Last week the International Chamber of Commerce ruled in favor of Iraq, which means that the pipeline from Kurdistan won’t be running, and companies that use the line will have to move oil into storage. The stoppage has helped boost oil prices back to near $80 a barrel on Brent. Iraq is looking to try to restart those exports, saying a delegation from the ministry will meet with Turkish officials soon to find a way to export oil out of northern Iraq. 

European windmills.

The European Union has come to an accord on boosting the 27-country bloc’s share of power sourced out of renewables to 42.5% by 2030 – so not quite doubling the current 22%, as Bart Meijer, Kate Abnett and Philip Blenkinsop report here. What’s notable is the variance in terms of reliance on renewables – Sweden leads all 27 with 63% of energy supplied by renewables, while the likes of Luxembourg, Malta, Netherlands and Ireland all sit at less than 13%.  

Right now, that target for 2030 was 32%, but there are more efforts underway to restrict sales of gas-powered vehicles and add more solar, wind and nuclear power generation to get the EU to meet its goal to cut net greenhouse gas emissions by 55% by 2030, from 1990 levels.  

The effort has gained more traction since Russia invaded Ukraine – and later restricted supply of natural gas to the continent. There is still plenty of reliance on natural gas throughout the EU, but even that is poised to diminish in coming years. 

Those are the storage tanks and gas-chilling units at Freeport LNG’s plant in Texas. Reuters/Arathy Somasekhar

Giant liquefied natural gas terminals – used to cool the gas so it can be transported into vessels for overseas use – are difficult projects to pull together in the best of times. But with gas prices tumbling and turmoil in banking going on, that hurdle has risen more, Scott DiSavino reports here. Of four new projects that were looking for a greenlight this quarter, two have been pushed back, and analysts say others will face a similar level of scrutiny.

There are some projects in the works, including Venture Global LNG’s project in Louisiana and Sempra Energy’s one in Texas, and they’ll offset the risk of fluctuating gas prices with long-term contracts. Demand remains high in Asia and Europe for LNG, as markets have become tighter and after Russian supplies to Europe stopped after Moscow invaded Ukraine.  

The other two proposed projects were from NextDecade and Energy Transfer LP, repeatedly delayed due to rising construction, labor and borrowing costs, and by the recently narrowing spread between U.S. and global gas prices. For what it’s worth, the Freeport LNG export plant in Texas is returning to full power after a shutdown that lasted several months.  

That’s Venezuela’s Attorney General Tarek Saab, during a media conference last week about the ongoing corruption probe into PDVSA. REUTERS/Leonardo Fernandez Viloria

Venezuela, which has been amping up probes into alleged corruption at energy firms in the country, is now reviewing accounts of Maroil Trading, owned by Venezuelan shipping magnate Wilmer Ruperti, stemming from outstanding debts from petroleum coke supply, as Deisy Buitrago, Marianna Parraga and Sudarshan Varadhan report here. The investigation is part of a widescale anti-corruption probe audit of commercial accounts receivable, five sources told Reuters. 

Maroil owes PDVSA about $424 million, but that’s only a small part of the $21 billion that PDVSA shows in its accounts receivable (essentially, money owed to it). That figure is equal to about 84% of PDVSA’s total value of invoiced shipments – so basically the state oil firm’s records indicate they’re not getting paid for selling oil.  

Maroil called the report wrong without addressing specifics; PDVSA did not respond to Reuters’ requests for comment. 

PDVSA is sitting on tons of losses that grew in part from dozens of little-known companies acting as middlemen for Venezuela’s oil exports since U.S. sanctions in 2020 halted deals with international trading firms and customers. So far, 21 officials and businesspeople have been arrested and another 11 are wanted for arrest. PDVSA has denied Reuters’ reporting. 

“Of course there are periods where the sun doesn’t shine and the wind doesn’t blow, but these are not so common in Europe. Hydrogen can secure the remaining part.”  

Joerg Burzer, Mercedes-Benz head of renewable production, saying he was confident that battery storage will evolve to where renewable supply will be consistent 

U.S. production hasn’t been able to push much beyond 12 million barrels a day. 

Production and drilling outlooks have turned sour in the U.S. oil patch, according to the Dallas Federal Reserve, which notes that companies are talking about rising costs for a ninth straight quarter while oil-and-gas prices have come down, making drilling less economical. 

That could threaten overall output in the United States, which has remained steady in the range of 12 million barrels a day dating to last summer. But with natural gas prices slumping, that’s another area of profit that is being eroded. Oil prices have retrenched in the wake of the turmoil around the global banking system – but if production drops off that would also be bullish for oil prices. 

Demand in the United States is down 5% over the past four weeks when compared with March 2022, but both gasoline and jet fuel demand is up from the same period a year ago – but distillate (diesel) demand and the consumption of other oils is down. 

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