Again, oil security is determined by both global-market balances and geostrategic realities – at present the Mideast war and Russia’s War on Ukraine. My analyses this weekend were featured in: (a) an AlHurra video (LHS English, RHS Arabic), and below these (b) a detailed BBC-Cairo print interview (LHS English Google Translate, RHS Arabic original). where I make similar points as my Friday video in Warsaw.
My BBC (CAIRO) print interview in Arabic and English (Google Translate):
Continue readingPosted in Energy and Geopolitics, Energy and Geostrategy, Iran, Iran nuclear, Iran sanctions, Israel, oil, Oil Crisis, Oil prices, Oil supply, OPEC, opec-plus, Persian Gulf, Russia, Sanctions, Saudi Arabia, The USA, Ukraine, Ukraine, Ukraine war, Uncategorized
Tagged Alhurra, BBC, economy, Energy, gaza, geopolitics, Hamas, Hezbollah, Iran, Israel, Lebanon, Middle East, oil, oil sector, OPEC, politics, Russia, Ukraine, Ukraine war, United States
Below, I am quoted repeatedly (marked in bold -TO’D), by Newsweek’s intrepid Brendan Cole, reporting from London on Russia and Ukraine. I was on the Berlin-Warsaw express, heading to the Warsaw Security Forum. At the end are links to several other-language versions. Read on …
Putin’s Arctic Project Suffers Blow From Top Trade Ally
By Brendan Cole Senior News Reporter FOLLOW
India has refused to buy liquefied natural gas (LNG) from Vladimir Putin‘s flagship Arctic energy project delivering a “major blow” to Moscow’s fuel exports, an energy analyst has told Newsweek.
India’s oil secretary, Pankaj Jain, has said that New Delhi is “not touching” any commodity from the Arctic LNG 2 project due to sanctions that followed Putin’s full-scale invasion of Ukraine aimed at stifling Russian energy revenues, which the United States stepped up this month.
Putin had high hopes for the seaborne resource after losing the lucrative European market for pipeline gas due to sanctions and the president’s move to weaponize the fuel, which only spurred countries to find other suppliers.
Following huge losses, Gazprom cut its fuel production while a proposed Power of Siberia 2 pipeline to transport increasingly stranded Russian gas resources to China remains delayed amid haggling over price.
However, attempts by state firm Novatek to get Russia’s gas to market through the Arctic LNG 2 project have so far failed after Jain said last Friday, “We are not buying any sanctioned commodity.”
Newsweek reached out to Novatek for comment.
Berlin-based energy analyst Tom O’Donnell said Russia’s switch to boosting LNG exports has been fraught with difficulties due to sanctions.
“They have had to considerably cut back because they can’t get either the equipment to build it or the ships to transport it,” he told Newsweek.
“LNG from the new Arctic LNG 2 project was very important for Putin to be able to ship it to India and to China,” he said. “With India dropping out, this will be a major blow.”
Russia plans to triple its LNG exports by 2030 to 100 million tons. The country is expected to play a key role in India’s energy strategy, which has built terminals to receive the fuel.
Continue readingPosted in Energy and Geopolitics, Energy crisis, energy war, gas, geopolitics, India, LNG, Russia, Sanctions, The USA, Ukraine, Ukraine, Ukraine war, Uncategorized, USA
Tagged Arctic LNG, Energy, Gazprom, geopolitics, India, LNG, natural gas, news, politics, Russia, russia sanctions, Russian gas, Secondary sanctions, Shadow fleet, Ukraine, Ukraine war, USA
Will Israel hit Iranian oil infrastructure? And, what part of it? To what effect on markets, and geopolitics, (i.e., Mideast, OPEC, Russia and Ukraine war)? A video report.
MAIN POINTS (see transcript):
1. What if Israel hits Iran oil infrastructure in retaliation for missile strikes on Tel Aviv on Tuesday night? 1.a. The difference effects of hitting Iranian refineries vs oil export terminals In itself, neither target would make big difference in the market. The market would immediately jump, of course, but in principle the effect would be small. 1b OPEC+ and Western Hemisphere have plenty of spare capacity.
2. Consider Saudi market tactics … reportedly they want to now go for share over price support, as price support is failing after well over a year of output cuts (about 6 mb/d). Note: Shortly after this recording the Saudis repudiated the WSJ that reported the switch in tactics to defending share. Likely they’ll now want to wait and see what happens to Iranian exports, or if this Israel-Iran tit-for-tat gets out of hand.
Continue readingPosted in Energy and Geopolitics, Global Oil Market, Iran, Israel, oil, Oil prices, OPEC, opec-plus, Persian Gulf, Putin, Russia, Sanctions, Saudi Arabia, The USA, Ukraine, Ukraine war, Uncategorized
Tagged Energy, geopolitics, global oil market, Iran, Israel, Isreal, Middle East, oil, oil price caps, oil sector, OPEC, Russia, Tom O'Donnell interview, Ukraine, Warsaw Old Town, Warsaw Security Forum, WSF2024
This epitomizes today’s LNG-geostrategic nexus.
One way to look at the Turkey-Shell LNG deal is that Mr. Erdogan wants Turkey to avoid Germany’s blunder in relying heavily on Putin’s Russia for its imported natural gas. He obviously wants Turkey to diversify its natural gas imports. In this regard, the opening comment by Tom Marzec-Manser, head of Gas Analytics at ICIS, London, that “this is a big deal” for Turkey – is correct.
Turkey uses about 50 bcm (billion cubic meters) of natural gas per year. This is currently supplied almost entirely via pipelines, mainly from Russia, also from Iran and from Azerbaijan. As I pointed out, Mr. Erdogan is well aware how Putin cut off German and EU Russian gas supplies as a geostrategic weapon in preparation for his full-scale invasion of Ukraine. This plunged Germany and the entire EU into the acute 2022-2023 European energy crisis. Germany, especially, still has not fully recovered.
Continue readingPosted in Azerbaijan, Germany, Iran, LNG, LNG,, natural gas, Russia, Turkey, Ukraine war, Uncategorized
Tagged Azerbaijan, Botas, economy, Energy, geopolitics, Germany, Iran, LNG, natural gas, news, Russia, TRT, Turkey, Turkiye
I was asked to write a Brief for the USA House of Representatives’ Committee on Foreign Affairs (Europe Subcommittee) 12 March hearing: “Going Nuclear on Rosatom: Ending Global Dependence on Putin’s Nuclear Energy Sector,” submitted via Wilson Center in Washington, where I am a Global Fellow (external). There are two aspects to the Brief:
I highly recommend their three Appendices.
I should note that what I wrote in the main body was likely unexpected. I wrote that, for accomplishing a pragmatic, nuclear-power-inclusive energy transition in the 3-Seas Region (i.e., the EU’s Central and Eastern Europe, Baltic, and Balkan Member States), the continued dependencies on Russia’s Rosatom are not the only threats. The threat from the Group of Seven anti-nuclear states, led by Germany, is clearly equally or more disruptive to the Region accomplishing a pragmatic energy security-and-transition policy. I’ll quote a bit of the report on this point:
Continue readingPosted in CEE Nuclear Expert Network, Ehergiewende, Energiewende, Energy and Geopolitics, Energy crisis, energy war, Euroepen Union, geopolitics, Germany, Kennan Institute - Wilson Center, nuclear energy, Nuclear power, Putin, Rosneft, Russia, Ukraine, Uncategorized
Tagged Energy, geopolitics, Germany, Nuclear, nuclear energy, nuclear fuel, nuclear Renaissance, rosatom, Russia, Sanctions, Three Seas, Ukraine, United States, usa congress, wilson center
[Right: Video in English. Below: Arabic version]
The US administration asserts that Kyiv’s drone strikes on Russian refineries threaten to cause higher oil prices. However, as I have argued since early-mid-March (Kyiv Post, USA press, USA press, Polish press), this is not logical (to first order). What undoubtedly alarms DC is that Kyiv has demonstrated that – if it chose to – it could also disrupt the three big Russian westward-facing oil-ports that handle 60% of Russian exports to the global oil market, undoubtedly causing a global oil-price shock. But, fear of such a shock might be overblown. [1]
Continue readingPosted in Global Oil Market, Interview, Oil prices, Russia, The USA, Ukraine, Ukraine war, Uncategorized
In an Easter Sunday interview in 20+ Polish papers [POLISH & ENGLISH below], I said White House reasons for Ukraine not to hit Russian refineries don’t make sense. The “elephant in the room” alarming DC is that Ukraine can now disrupt Primorsk, UST-Luga and Novorossiskya oil ports, needed for 60% of Russian exports.
This would not only deny Moscow vital oil revenues needed to wage war, it would also spark a spectacular global oil market shock. I explain that the USA and allies can urgently prepare for this, while the Ukrainians are still maintaining strategic patience.
Continue readingPosted in diesel, drones, Energy and Geopolitics, Energy crisis, energy war, geopolitics, Interview, Kennan Institute - Wilson Center, oil price war, Oil prices, Oil supply, Poland, Putin, Russia, Sanctions, The USA, Ukraine, Ukraine war, Uncategorized
Tagged drones, Energy, geopolitics, Germany, oil market, oil ports, oil price, oil price cap, oil sector, pap, Polish, politics, refineries, Russia, russian oil, Russian ports, Tom O'Donnell interview, Ukraine, Ukraine war, United States, War
“O’Donnell told Newsweek that that if Ukrainians really wanted to hit oil exports, they would go after Novorossiysk Fuel Oil Terminal in the [eastern] Black Sea and Primorsk Oil Terminal at the end of the Baltic Pipeline System.
“‘These are the two major exports sites for Russian oil and they are demonstrated to be within range of aerial drones and perhaps, in the case the Black Sea, their seaborne drones,’ he said. ‘If they really want to cut Russia’s oil income, they would go after those ports and they haven’t—that might be in deference to Americans concerns.’“ (Russia Faces Major Gas Headache After Ukraine Strikes, Newsweek, article by Brendan Cole, Mar 25, 2024.)
Last week, Newsweek (USA) twice cited my analysis of Ukrainian drone strikes. In one instance, I had the honor of following an interview with General Ben Hodges, former Commander of US Army, Europe, with whom I concur in regretting the USA opposition.
(Aside: I hope to have an Op-Ed, perhaps tomorrow, in Europe, assessing that (i) the USA’s stated reasons versus Ukraine’s drone strikes to date do not make sense, and (ii) the “elephant in the room,” which must really have alarmed the White House, is that Ukraine’s strikes on refineries ipso facto demonstrate they COULD, if they so chose, disrupt anywhere up to 60% of Russian oil exports. Lastly,(iii) if the USA, EU and allies do not rapidly prepare non-Russian oil-sector producers for this eventuality, a global oil price shock could result.)
Here are the links to last week’s two new interviews/citations by Newsweek:
Continue readingPosted in diesel, drones, Energy and Geopolitics, Energy and Geostrategy, Energy crisis, energy war, Euroepen Union, geopolitics, Global Oil Market, Oil Crisis, Oil prices, Oil supply, Russia, Sanctions, Ukraine, Ukraine war, Uncategorized
Tagged drones, Energy, geopolitics, Germany, Newsweek, oil sector, Putin, Russia, russian oil, Russian refineries, Tom O'Donnell interview, Ukraine, Ukraine war, United States, War
Interview 1/3: Kate Lycock of DW Radio’s Inside Europe interviewed me yesterday, on the historical role of fuel-denial in war, and the impacts of Ukraine’s drone strategy on Russia (first story, on 21 March)
Aside from some WW2 history, I identified two separate impacts we can see in the present Ukrainian campaign: a) The impact on Russian fuel deliveries to the war zones themselves and to the domestic Russian war economy, and b) their possible impact as a “force multiplier” for the oil-price cap sanctions on Russian oil exports, designed to deny Moscow its all-important oil revenues that are financing its aggression. I also speculated a bit as to how these strikes, together with Black Sea sea-drone operations, might be shaping coming Ukrainian offensive(s). (This show is also syndicated in the USA as I recall.)
2/3: on 20 March, I was also interviewed on the drone strikes by Voice of America’s Harry Ridgwell, while I was at the Berlin Energy Transition Dialogue, held at the German Federal Foreign Office. (See Video in LHS column.)
3/3: Lastly, I was quoted a couple times by Brendan Cole of the USA national magazine, Newsweek, on 18 March:
Read more: My DW, VoA & Newsweek interviews: “Ukrainian drones cripple Russian refineries.” Thoughts on strategy, impacts and historyMar 18, 2024. By Brendan Cole, Senior News Reporter. You can read it HERE.
Note, there are new developments since yesterday, including Russia’s revenge strikes on Ukrainian infrastructure (reports are that 1 million Ukrainians have no electricity today) and on its Special Operations Headquarters. However, of the 30 Russian drones that swarmed to target this Kyiv building, every one was shot down.
Also, there are reports (Financial Times) that the USA is warning Ukraine that the strikes will draw retaliation and raise the price of oil.
Who cares! This has gone on for simply too long. There are vastly sufficient oil reserves in the world that can be tapped to fully replace Russian oil even if it were totally taken offline. After over two years of war, Washington and the EU Members should have by now begun a concerted effort to get sufficient new oil on line to enable blocking a high percentage of Russian exports from being exported to the world market
I talk about one possible approach to this in my DW interview, involving Denmark and Sweden inspecting and banning passage of sketchy Russian tankers through their economic zones in the Baltic Sea.
After two-plus years of war, there is no excuse to still be playing around with the oil price cap without either significantly lowing it — say, to $30/barrel as the Ukrainians suggest, in any case begin stepwise lowering it below the present $60, which would be a signal to producers to start developing new fields — and/or finding ways to block shipments more directly.
This is not to diminish the clever and difficult work people at especially OFAC and the USA Justice Department in Washington and their colleagues in London and Brussels have carried out to tighten and make more effective the oil price cap. However, as it stands, the cap is too high and a weak instrument.
The entire political preoccupation with keeping Russian oil on the market is fundamentally flawed, Signals must be given to the market that it will be step-wise taken off the market, which will instill/stimulate IOCs, NOCs and smaller firms to rapidly bring undeveloped oil reserves online to permanently replace Russian exports.
LAST: Here are some references for further reading that I found useful in my research.
Posted in diesel, drones, Global Oil Market, Russia, Ukraine, Ukraine war, Uncategorized
Tagged diesel, drones, dw.de, Energy, gasoline, oil, oil price, oil sector, Russia, Russian refineries, Tom O'Donnell interview, Ukraine, Ukraine war, War
According to energy and geopolitics expert Tom O’Donnell, Ukrainian allies’ oil price cap, in conjunction with Ukrainian drones’ physical damage could be a significant hit to Russian revenues.
by Jason Jay Smart | March 15, 2024, 2:16 pm | Please read at Kyiv Post if possible
Tom O’Donnell, PhD, an expert on energy and geopolitics, sat down with Kyiv Post to explain what Ukraine’s attacks on Russia’s energy sector will mean for the larger Russian energy sector.
It sounds like a huge number. But how much do you think losing 12 percent of production, in a day, will affect Russia?
First off, although these refineries hit by Ukrainian drones yesterday represent about 12 percent of Russian production, experience shows that they might not each be totally impaired from production. Nevertheless, there are two particularly significant implications for Russia.
First, whatever percentage of Russian refined oil products this impairs, the damage will both deprive the war economy of needed export revenues and/or of much-needed fuels to keep the domestic war economy running.
Already, Russia had announced it will ban the export of gasoline from March 1 in order to tame prices for consumers in the runup to the presidential elections mid-month. In 2023 about 17 percent of Russian gasoline was exported.
What is the origin of the current price pressure?
The present price pressure is both a result of the demands of the war economy as well as previously successful Ukrainian hits on other refineries that began in January.
Read more: My Kyiv Post Interview: “Russia Lost 12% of Its Oil Refinery Capacity in a Day: What’s the Impact?”This gets to my second point – the successful refinery strikes of yesterday, involving a reported launch of 58 drones, as well as recent hits on a Russian domestic gas transmission pipeline, all demonstrate that the January successes were not one-off special operations, but rather the beginning of what will be a sustained Ukraine armed forces campaign capable of, over time, significantly disrupting Russia’s all-important oil and gas import revenues and internal refined-product supplies.
Kyiv has launched some of its largest air attacks on Russia this week ahead of the vote, which is set to hand President Vladimir Putin another six-year term in the Kremlin.
If Russia continues to lose refineries, which appears likely, what new complications will it create for Russia?
First, from a strategic point of view, it is important to see these physical strikes against Russian oil and gas infrastructure in conjunction with the sanctions efforts of the USA, EU and other allies aimed at reducing Russian oil profits. These drone strikes should be seen as a “force multiplier” to allied oil sanctions.
How so?
Consider that, with Russia no longer having the Druzba oil pipeline flowing into Central Europe due to EU sanctions, this has forced it to shift its Urals-region oil exports to seaports on the Baltic coast of Russia and to a new western-Arctic port. Hence, hitting any refining or export facilities inside Russia along this general Urals-oil export corridor has a significant effect on Russia sustaining export revenues. This oil mainly flows to Turkey, India and China, with Russian oil tankers representing the main users of the Suez and then the Red Sea. Due to sanctions, most of these ships are now either directly or indirectly Russian-controlled, to avoid the sanctions oil-price cap.
There has been a discussion in US-EU security-and-sanctions circles that these ships could be stopped for inspection by Sweden and/or Denmark in the Baltic, in the straights between their countries, and many might be refused passage due to having sketchy insurance and/or being unsafe, old vessels.
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What do you think of the oil price cap? Is it a good idea?
From the point of view of strategic impact, the allies’ choice of an oil-price cap has been, in my view, a weak and overly complex-to-enforce instrument. However, in conjunction with Ukrainian drones’ physical damage, the overall hit to Russian revenues might become significant.
Secondly, Ukraine has also hit refineries in Russia just east of its own territory, which will mainly undermine the region’s war economy and complicate supplying the massive demand from Russia’s invasion forces. This region already has chronic fuel-supply problems, with farmers last year protesting against a lack of diesel for harvests, causing Russia to ban diesel exports during that season.
Dr. Tom O’Donnell is Berlin-based and is a Global Fellow of the Wilson Center.
Jason Jay Smart, Ph.D., is a political adviser who has lived and worked in Ukraine, Moldova, Kyrgyzstan, Kazakhstan, Russia, and Latin America. Due to his work with the democratic opposition to Pres. Vladimir Putin, Smart was persona non grata, for life, by Russia in 2010. His websites can be found at http://www.JasonJaySmart.com / http://www.AmericanPoliticalServices.com / fb.com/jasonjaysmart / Twitter: @OfficeJJSmart
Related references for assertions I made in my interview – Tom O’D.
Posted in energy war, Global Oil Market, Global Oil system, Interview, Kyiv Post, Russia, Sanctions, Ukraine, Uncategorized
Tagged drones, Energy, Interview, kyiv pos, Kyiv Post, oil, oil price cap, politics, refineries, Russia, Sanctions, Ukraine, Ukraine war, War
On 24 October, I was honored to moderate a great roundtable in Berlin with three European energy experts, sponsored by Der Divan Kulturehaus. SUGGESTION: While listening, open up that speaker’s file below. You’ll find Ben Aris’ data-slides on Russian price-cap failings, Andriy Kobolyev’s proposal to tax Moscow’s oil & Morten Frisch’s slides on EU renewable shortcomings & continued oil and gas needs.
Continue readingPosted in Berlin, Climate Change, Ehergiewende, Energiewende, Energy and Environment, Energy and Geopolitics, Energy and Geostrategy, Energy crisis, energy war, EU gas, Euroepen Union, gas crisis, gazprom, geopolitics, Nord Stream 2, Oil supply, Putin, Renewables, Renewables, Resource conflicts, Russia, Sanctions, Ukraine, Ukraine, Uncategorized
Tagged Energy, Energy crisis, energy prices, gas crisis, geopolitics, Germany, oil price cap, Renewables, Russia, Sanctions, Ukraine, Ukraine war, USA
Two key, of several, points I made:
[02.10.23 Note: Some typos/syntax corrected. Somehow could not edit w/ my phone yesterday.]
–1– The Saudis have no intention to spike oil price over $100/barrel, at least not for long – that’s my read.
Their customers’ economies are troubled, especially China, but Europe too – where too-high-an-oil-price could re-boost inflation, even push them into recession(s) killing oil demand.
Over the last year, the Saudi’s were newly proactive (their traditional mode was always to react after-the-fact). And their economists’ market calls were correct.
For several months, OPEC+ cumulative production cuts barely held prices stable. Only in recent months, along with new (though tepid) demand, did prices climb, form high-$80s to now mid $90s.
The Saudi minister professes to be unsure whether demand will rise in Q4. The IEA and the futures market (in backwardian now) see tightness. The Saudi minister answers that, if that happens, he has plenty of oil ready to put back into markets.
But – Nota Bene – despite present drawdowns in USA oil stocks and apparent tightness elsewhere, suddenly many oil analysts are saying that the present price rally could be short lived, and that OPEC-plus may have to keep or even deepen its cuts to maintain prices as they are.
Here are three very useful reports to this effect:
Continue readingPosted in Energy and Geopolitics, Energy crisis, energy war, Global Oil Market, Oil Crisis, Oil prices, Oil supply, OPEC, opec-plus, Russia, Saudi Arabia, The USA, Ukraine, Uncategorized
Tagged China, Energy, Energy crisis, geopolitics, oil price, oil price cap, oil sector, OPEC, Russia, Sanctions, Saudi Arabia, sky news arabia, Ukraine, United States
Posted in Euroepen Union, Global Oil Market, Russia, Sanctions
Tagged Energy, Russia, Ukraine, United States
The title and brief interview is rather self-explanatory. The interview starts after a brief intro, after 30 seconds.
Thanks to Daniel Winters, German national broadcaster Deutsche Welle’s (DW.de) English language Business News host for this invitation. We spoke, in Berlin, only a few hours after the cap was announced in Moscow.
Posted in Oil prices, Russia, Sanctions, Ukraine, Uncategorized
Tagged oil price cap, Russia, Ukraine
The Global Barrel 