Oil Daily | India's Russian Oil Imports Surge as Saudi Aramco Expands Capacity Projects

【Global Oil Supply and Demand】

Natural gas demand in the EU and UK rose in July compared to June, while inventories increased faster as Europe stockpiles gas ahead of winter, according to JODI data. EU and UK gas demand increased by 1.3 bcm, with inventories reaching new historical levels. Global production rose but was down year-on-year.

Solar capacity additions are set to reach a record 593 GW this year, marking a 29% increase. Although growth has slowed from last year's 87%, solar is expanding in new regions such as Saudi Arabia and Pakistan. Challenges include negative electricity prices, but solutions like grid improvements and battery storage are proposed.

China's coal-fired power generation increased in August despite growing renewable energy output. Coal remains vital in China's electricity mix, although renewables now surpass 50% of the installed capacity. China continues expanding coal power to meet rising electricity demand and ensure energy security.

【Oil-Producing Countries Dynamics】

Russian firms increased insurance for India's oil imports to 60% in July as India becomes the top buyer of Russian oil. Russian insurers help Moscow sell oil above the $60 per barrel price cap. India's purchase of Russian crude jumps, as the country remains committed to buying from the cheapest suppliers.

Turkey signed a 10-year LNG supply agreement with TotalEnergies to supply 1.1 million metric tons annually starting in 2027. Turkey aims to become a regional gas hub, with surplus gas to supply European markets. The deals allow Turkey to negotiate better terms, reducing dependency on Russia and Iran.

【Latest Oil Policies】

Saudi Aramco continues to expand crude capacity at several fields despite the Kingdom halting plans to increase maximum capacity to 13 million bpd. Projects like Marjan, Berri, and Zuluf are progressing, aiming to maintain a 12 million bpd capacity and operational flexibility.

【Industry News】

Securing Energy for Europe (SEFE) is building a stronger supply base before privatization by 2030. After the nationalization of Gazprom’s German business, SEFE secured LNG deals with Novatek, Equinor, and Adnoc. The Ruwais LNG project will be the first in MENA to run on clean power, aligning with Germany's climate priorities.

【Company News】

Saudi Aramco awarded a $2-billion contract to Saipem for the Marjan offshore field expansion. This contract follows another $1 billion agreement with Saipem for other Saudi fields. Aramco is focused on maintaining its sustainable capacity while progressing on crude increment projects like Marjan, Berri, and Zuluf.

Rosneft's legal challenge against the sale of its stake in Germany's Schwedt refinery is likely to fail. The court sees little chance of success for Rosneft's complaint regarding the stake sale to the Prax Group. Germany extended trusteeship over Rosneft's assets, anticipating negotiations for a sale to Qatar.

【Others】

As expected, the Federal Reserve announced a 50-basis-point rate cut, the first since COVID-19. Inflation has dipped to 2.5%, and more rate cuts are anticipated. The decision is expected to reduce borrowing costs, benefiting Democrats ahead of the presidential elections. The Fed remains committed to supporting 2% inflation and maximum employment.