G7 wants to engage in oil price limit? Russia: Cut off! Oil prices have plunged continuously

In recent trading days, international oil prices have fallen sharply, and downstream varieties such as fuel oil and asphalt have not been able to "stand alone"
.

The chairman of the board of directors of Russia's second-largest oil company died

According to global network news, comprehensive "Izvestia", Interfax and other Russian media reported on September 1 that Ravel Maganov, chairman of the board of directors of Russia's Lukoil Company, fell to his death
in the Moscow Central Clinical Hospital on the same day.
According to the report, the relevant authorities are investigating the cause of
his death.

According to Interfax, a source told the outlet on September 1 that Maganov died
that day after falling from the window of a ward in the Central Clinical Hospital.
Law enforcement officers are working on the spot
.

Luke Corporation is one of the world's largest vertically integrated oil and gas companies, mainly engaged in oil and gas exploration and development, production and sales
of petroleum and petrochemical products.
Currently, the company has grown to become Russia's second largest oil producer after Gazprom, ranking 67th in the Fortune Global 500 in 2022
.

Russia will stop supplying oil and products to companies or countries that place price caps on their oil

According to CCTV news, Russian Deputy Prime Minister Novak said on September 1 that Russia will stop supplying oil and petroleum products to companies or countries that set price caps on their oil, because Russia will not work
in non-market conditions.

According to Xinhua News Agency, White House press secretary Karina Jean-Pierre said on August 31 that the Group of Seven (G7) finance ministers will discuss US President Joe Biden's proposal
to set a price cap on Russian oil when they meet on September 2.

In response to media questions at the White House's regular press conference on the same day, Jean-Pierre said that Biden and other G7 leaders have instructed their teams to explore a mechanism
for setting a global oil price ceiling.
According to the United States, the mechanism is aimed at driving down the price of Russian oil and driving down global energy prices
.

U.
S.
Treasury Secretary Yellen met with British Chancellor of the Exchequer Nazim Zahavi on the same day that setting a price cap on Russian oil is "one of the most powerful tools" to fight inflation, ensuring a stable flow of oil into the global market
at a lower price.

Despite the decline in Russian oil exports, Russia's oil export revenue in June increased by $700 million month-on-month, 40%
higher than the average last year, due to higher oil prices, according to recent data released by the International Energy Agency.

Russian President Vladimir Putin previously said that proposals such as the G7 to restrict oil imports from Russia and set a price cap on Russian oil can only cause oil prices to soar
like natural gas prices.
Russian Deputy Prime Minister Alexander Novak said in July that if the G7 limits the price of Russian oil products, Russia will not supply oil
at a loss.

Market confidence has been hit, and short-term oil prices have weakened

"In the past few days, the sharp volatility in the crude oil market has been mainly around the geopolitical factors brought about by the turmoil in Iraq
.
" Yang An, head of research and development of Haitong Futures Futures Energy, told the Futures Daily reporter that in hindsight, with the situation in Iraq under control, the Iraqi National Petroleum Marketing Organization stated that Iraq's oil export business was not affected by the "green zone" conflict, and the oil price pulse market due to geopolitical events also came to an end, and the market quickly gave up the increase brought by the geopolitical premium
.

Du Bingqin, an analyst at Everbright Futures Energy, also mentioned that in fact, the fundamentals of the global oil market have not changed
much.
She believes that in addition to the impact of the situation in Iraq, the volatility of the crude oil market has also further heated up due to the expectation of aggressive interest rate hikes by the Federal Reserve in September, and the market's concerns about the recession dragging down demand have deepened
.
In addition, the news of the current negotiations on the Iranian nuclear agreement is still an important disturbing factor
for international oil prices.

According to Du Bingqin, from the data, various institutions expect Iran's crude oil reserves to be between 60 million barrels and 93 million barrels
.
"Once the JCPOA is finalized, then Iran is expected to soon release its floating storage and potential production, putting supply-side pressure
on the global oil market.
" Negotiations remain deadlocked, and the outcome of further negotiations in September is uncertain
.
At the same time, it is necessary to pay further attention to whether the OPEC+ meeting on September 5 will support oil prices
with production cuts.
She reminded
.

In Yang's view, the next market focus is on the European energy crisis and the September OPEC meeting
.
It is understood that the EU countries led by Germany began to prepare to set limits on natural gas prices at the emergency meeting of EU energy ministers on September 9, and soaring energy prices have had a devastating impact on the European economy, and controlling energy prices has become the EU's top priority
at present.

OPEC has recently spoken out frequently to protect oil prices
.
According to Yang An, in the face of falling oil prices, the Saudi energy minister said that the current oil price performance is increasingly out of touch with fundamentals, which may force OPEC to act
.
At present, the market believes that Saudi Arabia stood up on behalf of OPEC in advance, obviously preparing in advance to offset the negative impact
of Iranian oil returning to the market as much as possible.
OPEC clearly does not want to hurt its own interests with a sharp drop in oil prices, but such a decision will not be supported by consumer countries while the global economy is under great pressure
.
The decision on production control at the September OPEC meeting will still have an important impact
on the later operation of oil prices.

"In general, at this stage, the global economy continues to be under pressure and the crude oil market itself is in the accumulation stage, oil prices have insufficient upward momentum, with the geopolitical speculation setback, market confidence has been hit, short-term oil prices are weak, in the downward exploration to seek support
.
" Yang An said that at present, the crude oil market is facing uncertainties such as the negotiation of the Iranian nuclear agreement and the follow-up cooperation of OPEC+, and the later changes are more complicated, and oil prices are likely to maintain a range oscillation tug-of-war, which may fluctuate
sharply at any time.

Cost fluctuations "affected" the entire crude oil system

For the trend of fuel oil and low-sulfur fuel oil, Xue Yangming, a researcher at Xinhu Futures crude oil fuel oil, believes that the current natural gas price is at a high level, and the cost of hydrogenation indirectly supports low-sulfur oil products, and after the recovery of diesel and low-sulfur valuation, the price difference between diesel and low-sulfur has further widened, superimposed on the recovery of secondary plant profits, and partially restricted the blending or processing of low-sulfur fuel oil, thereby supporting
the low-sulfur supply side.
Domestically, low-sulphur production will also decline
due to tight quotas.

Regarding the recent relatively sluggish performance of the low-sulfur fuel oil market, Du Bingqin said that with the increase in the number of arbitrage cargoes and the current sufficient supply, the market structure of low-sulfur fuel oil continues to weaken
under the influence of this concern.
Traders expect Singapore's low-sulphur market to remain oversupplied over the next two weeks, but expect reduced arbitrage and reduced regional refinery production to help support the market in the
second half of September.

In terms of high-sulfur fuel oil, Xue Yangming believes that OPEC+ maintains a high implementation rate of production reductions, but the ability to increase the production of sweet oil is insufficient, the Middle East oil-producing countries continue to increase sour oil production slightly, the United States releases a large amount of SPR sour oil, and refinery starts are also at a relatively high level, resulting in sufficient high-sulfur supply and pressure on
valuations.
However, the subsequent US SPR will turn to sweet oil, and the supply pressure will ease slightly
.
Although Russian oil products are expected to decline due to sanctions, the short-term impact is relatively small
.
Du Bingqin said supplies from the Middle East and Russia are still flowing into Singapore, in addition to concerns about increased supplies from Iran
.

In terms of demand, Xue Yangming said that the current demand for low sulfur is flat, and the cost performance of high sulfur storage has not seen a significant recovery
.
According to him, in terms of shipping, the number of containers, dry bulk cargo and oil tankers in operation is at a high level, but the support for ship fuel consumption is limited
.
However, the current cost performance of desulfurization units is still outstanding, and the demand for high-sulfur ship fuel is expected to continue to increase
slightly.
In terms of power generation, it is currently in the summer power generation season in the Middle East, South Asia and other places, and the price difference between fuel oil and natural gas is large, and the demand for high-sulfur fuel oil still provides some support, but the peak season is nearing the end, and the future demand will decline
.
In winter, it will switch to low-sulfur power generation
.
In terms of refineries, high-sulfur fuel oil has a cost-effective feeding ratio, but the United States, an important consumer country, has not seen an increase
in procurement due to the presence of a large amount of SPR acid oil.

Overall, Xue Yangming believes that the profits of diesel ends, natural gas, and secondary plants have supported low sulfur, while the upward drive for high sulfur valuation is relatively weak, and the bottom still has some support in the peak season, and it is recommended to pay attention to the Iranian nuclear agreement and OPEC's
potential production cuts.
Du Bingqin expects that as the peak demand season begins to gradually come to an end, the Asian high-sulfur fuel oil market may show an inflection point, while the low-sulfur fuel oil market is still well supplied, or will remain sluggish, paying attention to the fluctuation
of international oil prices on the cost side.

The main asphalt contract bottomed out, and the basis hit a half-month high
.
Hong Xiaoqiang, a researcher at Zhejiang Futures, said that from a fundamental point of view, since the first half of the year, Sinopec, PetroChina, CNOOC and other subordinate refineries have successively carried out maintenance, which has greatly compressed the supply of asphalt
.
At the same time, asphalt demand gradually increased in the second quarter, and refinery shipments remained high, prompting asphalt prices to rise for a while
.
In August, as domestic refineries completed maintenance, asphalt production increased steadily, and the pressure on the supply side was greatly eased
.
It is reported that the actual output of the national sample in August was about 2.
7 million tons, an increase of 200,000 tons
from the previous month.
Driven by demand, bitumen still maintains destocking, but the speed and magnitude of destocking gradually weakens
.

"After entering September, the contradiction between asphalt supply and demand will gradually ease.
"
Hong Xiaoqiang said that from the supply point of view, the output of asphalt plants across the country will continue to grow
.
It is reported that the national asphalt discharge output in September is expected to be about 2.
9 million tons, an increase of 200,000 tons
from the previous month.
From a demand perspective, follow-up demand will gradually weaken, but bitumen prices are expected to remain supported by terminal demand in September and continue into October, followed by a weakening
with the onset of the seasonal off-season.