Oil price spikes to $139 on talks about Russia oil ban, Iran deal delay

LONDON - Oil prices spiked to their highest levels since 2008 on Monday amid market supply fears as the United States and European allies considered banning Russian oil imports and prospects for a swift return of Iranian crude to global markets receded.

In the first few minutes of trade Brent crude reached $139.13 a barrel and US West Texas Intermediate (WTI) hit $130.50, both benchmarks striking their highest since July 2008.

By 1204 GMT, prices had eased back, with Brent up 6.3 percent at $125.55 per and WTI up 6.7 percent at $123.37.

Global oil prices have spiked more than 60 percent since the start of 2022, along with other commodities, raising concerns about world economic growth and stagflation. China, the world's No. 2 economy, is already targeting slower growth of 5.5 percent this year. 

US Secretary of State Antony Blinken said on Sunday said the United States and European allies were exploring banning imports of Russian oil, while the White House was coordinating with Congressional committees to move forward with a US ban. 

"We consider $125 per barrel, our near-term forecast for Brent crude oil, as a soft cap for prices, although prices could rise even higher should disruptions worsen or continue for a longer period," UBS commodity analyst Giovanni Staunovo said.

A prolonged war could see Brent moving above the $150 per barrel mark, he said.

Analysts at Bank of America said if most of Russia's oil exports were cut off, there could be a 5 million barrel per day (bpd) or larger shortfall, pushing prices as high as $200.

JP Morgan analysts said oil could soar to $185 this year, and analysts at Mitsubishi UFJ Financial Group Inc (MUFG) said oil may rise to $180 and cause a global recession.

Russia is the world's top exporter of crude and oil products combined, with exports at around 7 million bpd, or 7 percent of global supply. Some volumes of Kazakhstan's oil exports from Russian ports have also faced complications.

The head of Japan's largest business lobby said the country's imports of Russian crude could not be replaced immediately. Russia is Japan's fifth-biggest supplier of crude oil and liquefied natural gas (LNG).

Meanwhile, talks to revive Iran's 2015 nuclear deal with world powers were mired in uncertainty after Russia demanded a US guarantee that sanctions it faces over the Ukraine conflict would not hurt its trade with Tehran. China also raised new demands, sources said. 

France told Russia on Monday not to resort to blackmail over efforts to revive the nuclear deal, while Iran's top security official said the outlook for the talks "remains unclear". 

"Iran was the only real bearish factor hanging over the market but if now the Iranian deal gets delayed, we could get to tank bottoms a lot quicker especially if Russian barrels remain off the market for long," said Amrita Sen, co-founder of Energy Aspects, a think tank.

Iran will take several months to restore oil flows even if it reaches a nuclear deal, analysts said. 

Separately, US and Venezuelan officials discussed the possibility of easing oil sanctions on Venezuela but made scant progress toward a deal in their first high-level bilateral talks in years, five sources familiar with the matter said, as Washington seeks to separate Russia from one of its key allies. 

(Reporting by Bozorgmehr Sharafedin in London and and Scott DiSavino in New York, additional reporting by Florence Tan in Singapore; Editing by Jason Neely and Edmund Blair)

-reuters

Airlines' fuel practices feed doubts over climate commitment

PARIS, France — Airlines have taken steps to reduce their carbon footprints under the gaze of public opinion, but the pressure of the bottom line means some fly with extra fuel, boosting emissions of climate-changing greenhouse gases.

As the highly competitive air travel industry is being pushed to reduce its carbon emissions—which it puts at two to three percent of the global total—the practice known as fuel tankering has become an acid test for airlines' commitment to really go green.

In fuel tankering, an aircraft's tanks are filled sufficiently at the departure airport to avoid having to take on additional fuel for the return leg at a destination airport where fuel costs may be higher, or there are supply issues.

According to a study by Eurocontrol, the practice is a money-saving strategy for airlines as it outweighs the cost of additional fuel needed to carry the extra weight on the outbound flight.

"Aviation is a very competitive market and each airline needs to minimise operating costs, in order to keep its ticket prices as competitive as possible," said the group, an inter-governmental organisation that helps harmonise regulations in the sector.


With fuel accounting for up to 25 percent of airlines' operating expenses, "saving fuel has become a major challenge for aviation", it added.

Eurocontrol found that in Europe fuel tankering concerns about one in six flights, on average resulting in an extra 136 kg of fuel burned.

Despite the additional fuel cost of 75 euros it still results in a net saving of 126 euros per flight. That saving also includes nine euros for purchasing carbon allowances for the 428kg of additional CO2 generated.


The report estimated that in Europe fuel tankering could generate net savings of 265 million euros per year for airlines, while adding 286,000 tonnes of fuel burnt and 901,000 tons of CO2 emissions.

"This represents about 2,800 round-trips between Paris and New York or the annual emissions of a European city of 100,000 inhabitants," said the report.

Everybody does it...

After being called out for fuel tankering by the BBC, British Airways called it a "common practice across the airline industry" and said that it is done for "operational, safety and price reasons."

British Airways said it resorts to fuel tankering for "mainly short-haul destinations where there are considerable fuel price differences between European airports."

Willy Walsh, the head of IAG, British Airway's parent company, acknowledged that the issue shows that airlines are torn between economic and environmental imperatives.

"What we see today is that there is often a conflict between what we do that makes a commercial and financial sense and the things we should be doing from an environmental point of view," he told investors at a gathering at the beginning of November.

Germany's Lufthansa said it resorts to fuel tankering only exceptionally for operational reasons because the practice "goes against our goal of reducing carbon emissions," said a spokesman.

Air France said it practiced fuel tankering only on "some specific" routes for economic or organisational reasons.

Offsets

The airline industry adopted in 2016 a mechanism called CORSIA to offset any increase in CO2 emissions from 2020 levels using tree-planting and other schemes that absorb carbon.

This will allow the industry to continue to grow to meet rising demand for air travel without adding any additional carbon on a net basis.

Budget airline easyJet announced it plans to go further by offsetting emissions from all flights.

Most airlines have also undertaken efforts to reduce their emissions such as optimising flight paths, using electric towing vehicles or reducing the weight of seats.

But these efforts are not sufficient believes Andrew Murphy of the non-governmental organisation Transport and Environment.

"The increase of aviation emissions and stories like this show that actually the industry isn't doing enough and actually we can't just rely on the industry to cut it's own emissions," said Murphy.

"The equation is super complex" to arrive at a reduction of emissions when the volume of air traffic is expected to double every 15 to 20 years, said Pascal Fabre, an air travel expert at the consultancy Alix Partners.

The situation is even more daunting as airlines need to make money to survive, with around a dozen going out of business in the past year and a half according to the International Air Transport Association (IATA).

source: philstar.com

Airline asks passengers for gas money

(CNN) -- Passengers were asked to help pay for fuel on a Beirut-bound Air France flight that had to be diverted to Syria this week, the airline said.

In the end, passengers did not have to go into their pockets to help fuel the plane, the airline said.

"Air France confirms that it asked passengers if they had cash, as payments for fuel can only be made in cash in Damascus," an Air France statement said. "Ultimately, Air France could pay the full amount itself, and passengers did not have to advance any cash."

The incident occurred Wednesday on a flight from Paris to Beirut.

Because of security concerns in Beirut, the plane was scheduled to divert to Jordan. The plane could not secure a flight path to Amman, so instead, the crew decided to land in Damascus, Air France said.

It was during the two-hour stopover in the Syrian capital that passengers were asked for gas money.

After Air France figured out the issue, the passengers were flown to Cyprus and then taken to Beirut on Thursday.

"Air France apologizes to its customers for the inconvenience," the airline said.

source: CNN

Two more firms to roll back fuel prices

At least two more oil firms are rolling back prices of some of their products to effective Monday, to reflect lower world prices of the commodity.

Shell and Eastern Petroleum are rolling back fuel prices effective 12:01 a.m. Monday, according to GMA television reporter Julius Segovia via his Twitter account.

Eastern Petroleum will roll back prices of its unleaded and Intensity premium gas by 30 centavos per liter, diesel and Euro IV diesel by 65 centavos per liter, kerosene by 60 centavos per liter, and regular gas by 40 centavos per liter.

Shell will similarly roll back prices of unleaded gas by 30 centavos per liter, diesel by 65 centavos per liter, kerosene by 60 centavos per liter, and regular gas by 40 centavos per liter.

On Sunday, Flying V rolled back prices of diesel by 60 centavos per liter, and unleaded and premium gas by 35 centavos per liter, according to a report on "Balitanghali" on Saturday.

Rollbacks in May, particularly for diesel, allowed the Land Transportation Franchising and Regulatory Board to withdraw a 50-centavo provisional fare hike for jeep drivers.

The rollbacks effectively brought down the minimum jeep fare from P8.50 to P8. — LBG, GMA News

source: gmanetwork.com