Russia’s invasion of Ukraine on Thursday shocked the world and pushed oil prices above $100, the relatively lukewarm reaction from Western leaders sent oil prices lower on Friday as it becomes clear that the Russian energy industry is unlikely to be sanctioned.

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Friday, February 25, 2022

One would think that Russia’s invasion of Ukraine would have triggered a much stronger response from the international community. Instead, there seems to be hesitation and bickering among European leaders. The fact that oil prices are hovering around $100 per barrel and gas prices have skyrocketed to $50 per mmBtu will certainly have played a part in fueling this hesitation. It appears that Russian oil and gas flows are too important to international markets for Western powers to target with sanctions. The lack of sanctions against the energy sector is the main reason we saw oil prices fall on Friday.

Russia’s invasion of Ukraine raises commodities. The biggest war in Europe since World War II has sent commodities around the world on an upward spiral, with European gas hitting the equivalent of $50/mmBtu, oil above $100 a barrel and the wheat trade at record levels.

The reluctance of banks to face the prices of Russia Dents. Russia’s flagship grade, the Urals, collapsed following the Kremlin-led invasion of Europe as major barrel buyers were unable to open letters of credit in Western banks to guarantee payment, with banks wary of potential sanctions. Related: Don’t Count on OPEC to Lower Oil Prices

Iraq wants partners to develop the oil borders. The Iraqi government is to negotiate an agreement with Saudi Arabia (TADAWUL:2222) and Halliburton (NYSE:HAL) to develop and exploit oil and gas reserves in the country’s westernmost province of Anbar, a region largely underdeveloped after its 2017 takeover from Islamic State.

Disruption fears push Asian LNG prices higher. While Russia’s invasion could disrupt global LNG flows as Europe tries to secure stable gas supplies, Asian LNG spot prices jumped around 30% this week, the LNG market JKM is already trading above $37 per mmBtu.

Iraq shuts down a major field for sudden maintenance. Iraq has temporarily stoppedoutput from its 400,000 bpd West Qurna-2 field, reportedly to connect new wells and pipelines, likely leading to a further month-on-month decline in total Iraqi crude output.

Offshore wind auctions in the United States are attracting record interest. The first offshore wind lease sale under President Biden, offering 6 leases off the coasts of New York and New Jersey, outmoded all expectations and has garnered $3 billion in deals so far, with Equinor (NYSE: EQNR), BP (NYSE: BP) and EDF (EPA:EDF) vying for leases.

Nigeria is suing JP Morgan for $1.7 billion. Nigerian government spear a $1.7 billion lawsuit against a US investment bank JP Morgan Chase (NYSE: JPM) for his alleged negligence in the transfer of funds for an oil field license won by Shell (LON:SHEL) and ENI (NYSE:E) to a company owned by the country’s former oil minister instead of government accounts.

TotalEnergies announces a huge discovery in Namibia. French oil major TotalEnergies (NYSE: TTE) makes an important Discovery of light oil off the coast of Namibia, with the highly anticipated Wildcat Venus-1 digging up a net payday of 84 meters of high-grade sandstone reservoirs.

ExxonMobil comes out of the shallow waters of Nigeria. from Nigeria Seplat Energy (LON:SEPL) bought the entire share capital of ExxonMobil (NYSE:XOM) shallow water business in Nigeria for $1.28 billion, marking the American major’s final exit from the African country.

China is tinkering with coal prices again. Amid another spike in coal prices, China’s economic planner NDRC has together a “reasonable” price range for the country’s benchmark thermal coal of 5500 kcal at the Qinhuangdao hub, at $90-120 per metric ton, arguing that this bandwidth is mutually acceptable for miners and power producers. Related: Shell gas trade booms as oil trade slows

Anticipating the breakthrough of the deal, Iran begins to hoard crude oil. According to ship tracking data, the total amount of oil stored on tankers has increased by 30 million barrels in the past three months as Iran builds up a flotilla of VLCCs anchored off its coast that could be activated as soon as that the sanctions will be lifted.

Saudi Aramco is having the time of its life. Despite the news circulating that Saudi Arabia (TADAWUL:2222) continues to underperform its OPEC+ production target, the Saudi NOC saw its actions hitting an all-time high ($11.3 per share) following the invasion of Russia, gaining more than 16% year-to-date.

Ecuador awards drilling contract with Amazon to China. CNPC, the Chinese state-owned company landedthe first drilling contract in Ecuador’s Ishpingo oil field, located in the ecologically sensitive Yasuni National Park, apparently part of Quito to pay off its large debts to China.

Aluminum prices fall to record lows. After concerns over a possible Russian supply sanction pushed aluminum prices to a record high of $3,480 per metric ton this week, Friday’s trading saw them tumble once it has learned that the EU/US would not sanction aluminum flows.

By Tom Kool for Oilprice.com

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