THE MONTH IN BRIEF: Markets (nearly) go back to basics, Trump goes slow on border tax, but continues ban on US firms drilling in Russia

• Date: 01 May 2017
• DOI: http://doi.org/10.1111/oet.12476
• Published date: 01 May 2017

THE MONTH IN BRIEF

is section summarizes downstream developments of the prev ious month.

Markets (nearly) go back to basics, Trump goes slow on border tax, but

continues ban on US rms drilling in Russia

Aer a US missile strike on Syria on March 7, which

helped crude prices upwards by about a dollar, oil mar-

kets went back to concentratingon fundamentals of sup-

ply, demand, and inventory levels. Brent prompt-month

futures traded between $51.44 and $56.23/bbl, reaching

their high point just aer the US attack on Syria and

the shutting-in of Libya’s 220,000 bpd Sharara eld fol-

lowing the blockading of a pipeline connecting the oil-

eld to the export terminal of Zawiya, which followed on

shortly aerthe Syrian attack. e blockadewas lied on

the 27th of the month, sending prices back downward.

Nigeria’soilproductionwasalsodown:partlybecauseof

unrestintheNigerDeltabutalsobecauseofsomeeld

maintenance.

Most developments on the supply side, however, were

in the direction of increasing it. US production contin-

ued to climb, and Iranian exports were reported at their

highest level since most sanctions were lied in early

2016. ere were also growing doubts about the eec-

tiveness of the produc tion cuts agreed unde r last Novem-

ber’s deal between OPEC and 11 Non-OPEC countries

to cut their rst half 2017 production by 1.8 mn bpd.

While OPEC continued to perform well, doubts were

expressedovertheamountscutbythe11othercoun-

tries. Russia conrmed that it was still 50,000 bpd shy

of its 300,000 bpd target, and Kazakhstan’s production

actually rose as production from its recently c ommis-

sioned Kashagan eld continued to increase. When

traders weren’t worrying about gains and losses in the

supply half of the equation, they turned their attention

to stock levels, which remained at healthy levels in all the

main global markets, providing a further brake on crude

price rises.

Plans by the Trump administration for a t ax on oil and

other imports were l e out of a White House brieng on

tax proposals,giving rise to speculation that the planwas

being reconsidered. e measure, known as the border

adjustment tax, is designed to boost domestic oil pro-

duction and reduce US reliance on imports, particularly

from OPEC, but is meeting strong resistance amongst

some members of Congress. ere were also attempts

by US pipeline companies to water-down Mr Trump’s

proposals for them to use more US-produced steel in

future pipeline developments. Meanwhile, the Treasury

Departmentsaid it would not li restrictionsthat ban US

oil companies from drilling in Russia, under sanctions

imposed in 2014 over Russia’s involvement in Ukraine.

SaudiArabiasaidithadfoiledaplantousean

unmanned boat laden with explosives to blow-up an oil

terminal at Jizan. Riyadh claimed the vessel came from

Yemen and suggested it was sent by Houthi rebels, who

are ghting a Saudi-led coalition, which invaded Yemen

in 2015 in support of forces of Yemeni President, Abd

al-Rabu Mansur Hadi who were ghting the Houthis

in the north of the country. China National Petroleum

Corporation (CNPC) agreed terms with the govern-

ment of Myanmar on the use of the 440,000bpd cr ude

pipeline from Maday to south-western China. e line is

designed to supplythe Yunnan renery with crude, cut-

ting out the normal voyage through the Malacca Straits,

but disagreements overtransit terms have delayed its full

usefortwoyears.BPagreedtoselltheFortiesPipeline

System to Ineos, which owns the 210,000 bpd Grange-

mouth renery.

It was announced in Hanoi that Vietnam’s second

renery, the 200,000bpd Nghi Son plant, would be

delayed until next year, following delays in construction.

Hindustan Petroleum Corporation and the Rajasthan

government signed a joint-venture agreement covering

the building of a 180,000 bpd renery in the Indian state,

at Barmer, with completion scheduled for 2021. Oman

Oil Company and Kuwait Petroleum International said

they would build a 230,000 bpd export renery at Duqm,

in central Oman, to open in 2020.

© 2017 John Wiley& Sons Ltd