Oil Daily | Middle East Oil Supply Risk Eases; SPR Deliveries Delayed; Persian Gulf Shipping Rates Drop

【Company News】

Centrica, the owner of British Gas, considers taking a 15% stake in the UK's Sizewell C nuclear power project. Initially proposed by EDF and China General Nuclear, the UK government ousted the Chinese stake in 2022. Sizewell C is Britain's first announced nuclear power station in over thirty years.

The UK government has committed billions to Sizewell C, with current and potential new investors, including Brookfield Asset Management, aiming for an investment decision before the parliamentary recess in July. Brookfield might take a larger stake than Centrica's potential 15%.

【Global Oil Supply and Demand】

Goldman Sachs reports a drop in the risk of crude oil supply disruption in the Middle East to 4% after a ceasefire between Israel and Iran. The bank highlights factors such as stability during recent military actions and motivations in the U.S. and China to maintain oil price levels.

The Department of Energy announced a seven-month delay in crude oil deliveries to the strategic petroleum reserve (SPR) due to maintenance. The Biden administration had released 300 million barrels from the SPR, sparking concerns over supply security and financial challenges in refilling.

Spot rates for VLCCs from the Persian Gulf to Asia have decreased as military tensions near the Strait of Hormuz ease, leading to increased vessel availability and stable shipping flows. The market is recalibrating with reduced immediate conflict fears, though LNG shipping costs remain high.

【Latest Oil Policies】

The UK government withdrew support for the $34.4-billion Morocco-UK Power Project, a mega-renewables plan to deliver solar and wind electricity via an undersea cable from the Sahara Desert. The shift reflects concerns over geopolitical dependency and practicality of ultra-long-distance transmission.

【Industry News】

The UK is focusing on nuclear power to boost energy security, investing in conventional projects like Sizewell C and supporting Small Modular Reactors (SMR) technology development with competitions to unlock private finance, aiming to establish one of Europe's first SMR fleets.

【Oil-Producing Countries Dynamics】

Sudan and South Sudan have not agreed on revised oil export fees for South Sudan's exports through Sudan's pipeline. South Sudan is considering alternative routes, including a pipeline to Djibouti via Ethiopia in collaboration with China National Petroleum Corporation.

Iran confirmed no radioactive material leaked following U.S.-Israeli airstrikes on its uranium enrichment facilities. Despite operational damage downplayed by Tehran, energy analysts examine long-term implications for Iran's nuclear energy program, aiming for 15% national electricity from nuclear sources by 2030.

【Others】

Russia seized a village near Shevchenkove, close to a major lithium deposit, raising concerns over Europe's access to critical energy transition materials. This underscores vulnerability in supply chains amid military aggression, affecting plans for Ukraine's lithium resources to diversify European supply.

A sanctioned LNG tanker appears headed for Russia's Arctic LNG 2 project, potentially reviving exports amidst U.S. and EU sanctions. Previous efforts to sell LNG from Arctic LNG 2 faced challenges due to sanctions, deterring buyers and complicating Russia's export revival attempts.

Excelerate Energy bids to provide Iraq's first floating storage and regasification unit for LNG imports, aiming to reduce dependence on Iranian gas. Iraq seeks alternative supply options, including a gas agreement with Turkmenistan, amid power shortages exacerbated by the end of U.S. waivers on Iranian imports.