Hello Power Up readers, There is a real danger when markets dismiss major threats by a world leader, particularly the U.S. president. This can create a pervasive sense of unease among investors who struggle to position their money amid so many 'what ifs'. But when President Donald Trump on Monday threatened to choke off Russia's oil revenue if a deal to end the war in Ukraine was not reached within 50 days, markets deemed Trump's bravado a bluff, as oil prices actually dropped by over a dollar after the announcement while the Russian rouble rose. If the United States were to impose so-called secondary sanctions on Russia, the world's third-largest oil producer, the impact on global energy markets and inflation would be enormous, perhaps too big for Trump's appetite. Investors therefore appear to believe that the more extreme a Trump threat is, the less likely it is to be realized. That may be a decent bet, but it's also a risky one. I explore this conundrum in my column. Here are a few other stories that caught my eye this week: |
Graphics are provided by Reuters. |
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By Ron Bousso. Source: International Energy Agency Monthly Oil Market Report (July) |
OPEC said in a monthly report on Tuesday that the global economy may perform better than expected in the second half of the year despite trade conflicts, arguing that strong refining margins in recent months will help to support the demand outlook. OPEC kept its 2025 oil demand growth forecast for 2025 unchanged at 1.3 million barrels per day, putting total global demand for the year at 105.1 million bpd. OPEC's bullish outlook contrasts with forecasts by the International Energy Agency and other analysts for significant oversupply in the market in the second half of the year. OPEC's de-facto leader Saudi Arabia sharply boosted production and exports in June and July after OPEC and its allies led by Russia, a group known collectively as OPEC+, agreed to increase production targets by 2.5 million between April and September. On the demand side, IEA data suggests that crude consumption already started to falter in recent months. While demand rose by a robust 1.1 million barrels per day in the first quarter of 2025, growth is believed to have halved in the second quarter. As a result, the IEA trimmed its forecast for 2025 oil demand in its latest report to 103.7 million bpd. I wrote about the darkening outlook for oil prices in a column earlier this week. |
Oil production in Iraq's semi-autonomous Kurdistan region was severely reduced this week following four days of drone attacks on the region's oilfields. On Thursday, a strike targeted the Tawke oilfield operated by Norwegian firm DNO. Over half of Kurdistan's production of 285,000 bpd, which is operated mostly from western companies, has been shut down in recent days due to the strikes or as preventive measure by companies. It was not immediately clear who was behind the attacks, and no group has claimed responsibility. The country has been plagued for decades by deadly sectarian violence, particularly between Sunni and Iranian-backed Shia groups. Tensions have also risen in recent years between Baghdad and Irbil, where the Kurdistan Regional Government sits, over sharing revenue from oil production. The United States has also been piling pressure on Iraq to allow for the resumption of Kurdish oil exports through a pipeline that runs through Turkey, highlighting the fact that geopolitical tensions in Iraq and the broader Middle East continue to simmer and affect global markets. |
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A robotic dog employed by Imperial Oil. Arturo Pena/Imperial Oil/Handout via REUTERS. |
China accelerated the pace at which it is building crude oil stockpiles in June, wrote ROI Asia Commodities Columnist Clyde Russell, as the strongest imports in almost two years outweighed a rise in refinery processing. Meanwhile, gas-fired electricity production has dropped to record lows in the home country of Europe's largest gas-trading hub, explains ROI Energy Transition Columnist Gavin Maguire, dealing a fresh blow to natural gas bulls who eye Europe as a key growth market for sales of LNG and pipelined gas supplies. Finally, Reuters correspondent Amanda Stephenson did a fascinating deep-dive on the giant shovels, driverless trucks and dog-like robot that have all helped Canada's oil sands companies become some of North America's lowest-cost oil producers. |
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