More Severe Iranian Disruption

Later this year, California regulators will vote whether to extend the state’s Low Carbon Fuel Standard(LCFS) from its current expiration in 2020 to 2030. If it passes, renewable diesel would be the biggest winner among biofuels. A shortage of renewable diesel in California would create a strong incentive for producers to build new capacity in the next decade, particularly in feedstock-rich Asia.

Beijing Plays the Iranian Card in the Sino-US Trade Talks

Iranian President Rouhani recently met with President Xi at the SCO Summit. This meeting comes shortly after the withdrawal of the U.S. from the JCPOA, and the threat of U.S. sanctions on companies doing business with Iran. It is tempting to assume that China will strengthen ties with Iran, expanding oil trade with the Islamic Republic. However, China’s interaction with Iran is likely to be more symbolic than substantive.

Venezuela Decline Pits Exports against Throughput

Venezuela production has declined steeply and should fall under 1.2 million b/d by the end of 2018, to average 1.4 million b/d this year, 500,000 b/d below 2017 levels. The ConocoPhillips court rulings will help expedite the decline by complicating transport and logistics operations in the Caribbean. Already, PdVSA’s production has fallen far enough to force a choice between refinery throughput and exports. Meanwhile, President Maduro’s re-election invites more US sanctions but otherwise will not alter the production outlook.

Iran’s crude exports to fall by 300,000 BPD in 2018

Kallanish Energy:
There remains a lot of uncertainty regarding what comes next after the U.S. Treasury reinstates economic sanctions on Iran and the possibility of exemptions or some sort of “special treatment” to allies in Europe.

But for now, U.S. research and consulting firm ESAI Energy forecasts the sanctions will reduce Iranian crude oil exports by roughly 300,000 barrels per day (BPD) by late this year.