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By Gavin Maguire, Global Energy Transition Columnist

Hello Power Up readers.

Oil continues to hog the energy sector limelight as markets try to reconcile the supportive impact of reduced supplies from OPEC+ producers with downbeat data on fuel demand in the United States, the top crude oil consumer. 

OPEC+ ministers on Wednesday made no changes to the group’s oil output policy, after Saudi Arabia and Russia said they would keep voluntary supply cuts in place to support the market. However, crude prices slumped over $5 per barrel soon afterward as data on U.S. gasoline inventories rose by far more than expected and fuel consumption metrics hit multi-month lows. Prices remain under pressure as this newsletter hit the press.

Elsewhere, Germany’s cabinet agreed this week to put reserve coal plants back online until the end of next March in order to replace scarce natural gas and avoid potential power shortages. This may put the German government on a collision course with Europe’s new climate chief, who takes charge of shaping the European Union’s climate policies at a tense time. 

And talks to end strikes at Chevron’s two Australian liquefied natural gas (LNG) plants hit a snag on Thursday, with unions accusing the U.S. energy major of reneging on commitments and potentially gearing up to resume stoppages.

Today’s top headlines:

• Iraq-Turkey oil pipeline ready for operations, Ankara says
• Putin orders regulated prices for fuel oil, Russia’s export ban stays
• Exxon 3Q profits to climb from last quarter on higher prices

The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria. REUTERS/Heinz-Peter Bader

The supply cuts by OPEC+ producers – confirmed again this week in reporting by Ahmad Ghaddar, Olesya Astakhova and Maha El Dahan – have been the key driver of oil market sentiment since July, and fostered a Brent crude oil price rally from below $80 a barrel to close to $100 this week. 

However, market momentum abruptly reversed before any real test of the $100 level could be undertaken, as weak data on U.S. fuel consumption rained on the bulls’ parade and raised doubts over demand over the coming months. 

Some of the demand destruction could have been down to the torrential rains that flooded the northeast in late September, analysts said. But the roughly 30% surge in fuel prices over the past three months during what is normally the peak driving season in the United States also curbed consumption.  

The latest Reuters oil market report is here.

Former Dutch Foreign Minister Wopke Hoekstra is the new European Union climate chief. Thomas Coex/Pool via REUTERS

Former Dutch minister and one-time Shell employee Wopke Hoekstra was made to sweat by European lawmakers this week before securing the role that “puts him at the vanguard of cutting CO2 emissions in the world’s third biggest economy,” reports Kate Abnett and Anthony Deutsch.

As the main diplomat that will shape Europe’s climate policies going forward, Hoekstra takes charge just as climate action is faces political pushback as living costs surge and industrial output is down due to high energy costs. 

He told lawmakers he would push for the EU to slash net greenhouse gas emissions by at least 90% by 2040, a move backed by climate scientists, but which some industries have warned is unrealistic.

Chevron’s Wheatstone LNG facility on the Pilbara Coast in Western Australia. REUTERS/File Photo

Efforts to finalise a pact to end strikes at Chevron’s two Australian liquefied natural gas (LNG) plants hit a snag on Thursday, with unions accusing the U.S. energy major of reneging on commitments and potentially gearing up to resume stoppages.

Workers called off strikes less than two weeks ago after unions and Chevron accepted proposals on pay and conditions proposed by the country’s industrial arbitrator, the Fair Work Commission (FWC).

On Thursday, however, the Offshore Alliance, a coalition of two unions, said Chevron had “reneged” on its commitments to the arbitrator. Members would meet on Thursday night and Friday afternoon to discuss the issue, Lewis Jackson reports. 

Tankers parked off the port city of Nakhodka, Russia. REUTERS/Tatiana Meel

Russia’s ongoing struggles with fuel shortages continues, and on Thursday President Putin ordered the government to provide state funds to ensure a smooth heating season and regulate prices for fuel oil supplies for household heating. 

Russia on Sept. 21 introduced a ban on fuel exports to fight high gasoline and diesel prices as well as fuel shortages during harvesting season. There is no time frame for the restrictions to be lifted.

Since the ban was introduced, wholesale diesel prices on the local exchange have fallen by 21%, while gasoline prices are down 10%, Vladimir Soldatkin reports.

However, retail prices have yet to decline by as much and remain a concern for authorities. 

“I will not be a caretaker. It simply wouldn’t do justice to the scale, to the magnitude of our challenge…”

New EU climate chief Wopke Hoekstra to the EU Parliament on Monday.

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