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Tom Kool

Tom Kool

Tom majored in International Business at Amsterdam’s Higher School of Economics, he is Oilprice.com's Head of Operations

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Bearish Sentiment Is Building In Oil Markets Once Again


A combination of climbing Covid infections in China, uncertainty about the G7 oil price cap, and a build in U.S. oil inventories pushed oil prices lower this week. While oil prices did climb early on Friday morning, the build-up of bearish sentiment is palpable.









Friday, November 25th, 2022 

With the oil price cap set to come into effect in just 10 days, the oil markets are desperately awaiting any clarification on the price limit’s actual details. The European Union convened to align on a joint oil price cap, but talks broke down as members failed to agree on the best price point. Media reports suggest the G7-proposed oil price cap level would be in the range of 65-70 per barrel, substantially higher than initially assumed. Coupled with China’s COVID meltdown and US inventory builds, this news has pushed oil prices lower over the week.

China’s Opening No Longer Feels Real. China’s daily recorded Covid-19 cases hit an all-time high this week, surging above 31,000, with Henan and Guangdong moving back into lockdown mode while Beijing residents were put under the strictest restrictions since the onset of the pandemic. 

EU Countries Lambast Gas Price Cap Proposal. The recently announced proposition of the EU to cap gas prices at €275 per MWh was heavily criticized by member states, with some discontent about lack of clarity whilst Germany and the Netherlands claim any cap would shift supply elsewhere. 

Biden Considers Expanding Heating Oil Stocks. The Biden Administration is mulling an increase in buying of heating oil going into the Northeast Home Heating Oil Reserve, as the current stock of 1 million barrels of diesel (worth 10 days of supply) is not enough to ease the middle distillate squeeze. 

New Lula Era Means No More Asset Sales for Petrobras. The transition team of Brazil’s president-elect Lula da Silva has asked the outgoing Bolsonaro administration to halt all ongoing asset sales of national oil company Petrobras (NYSE:PBR) while at the same time pledging to have a non-interventionist policy.  

Chevron In for More Venezuela Action. US oil major Chevron (NYSE:CVX) might be allowed to significantly boost oil production in Venezuela if the government of Nicolas Maduro resumes Mexico-brokered negotiations with the opposition.

Iran’s Nuclear Program Draws International Ire. Following an IAEA report that found Iran to be enriching uranium to up to 60% at its Fordow site, Germany, France, and the United Kingdom condemned Tehran’s actions as a challenge to the non-proliferation system, dropping the odds of an Iranian deal anytime soon even lower. 

Plant Fire Stokes Fears of Frac Sand Supply. A blaze at the Superior Silica Sands plant, which produces frac-sand to be pumped into shale wells when drilling, is jeopardizing the supply of the key component in the Eagle Ford basin, with frac sand prices having already tripled in 2022 so far. 

Nigeria Puts Oil Theft Damage at $2 Billion. An investigation carried out by Nigeria’s Senate found that the African country lost more than 2 billion to oil theft in January-August 2022 and that only 66% of the country’s oil output was safe, with even major projects like Shell’s (LON:SHEL) Forcados susceptible to attacks.

Chinese Majors Speeds Up U.S. Divestment. According to media reports, the Chinese offshore oil major CNOOC (HKG:0883) is stepping up the sale of its US assets, with UK oil producer Harbour Energy (LON:HBR) rumored to be in talks for its stakes in two Gulf of Mexico fields, Appomattox and Stampede.


Germany Joins the Windfall Tax Club. Joining the ranks of the UK or Italy, Germany is set to introduce a 33% windfall profit tax on oil, gas, and coal companies in case their current profits exceed by 20% or more of their 2018-2021 average number.

Italian City Launches Challenge Against LNG Terminal. The Italian city of Piombino took the country’s government to court over a planned 5 bcm LNG terminal in the Tuscan port, saying that work on the project should only start once safety guarantees are provided to local fishermen and businessmen. 

New Drilling Frontier Opening Up in Africa. Buoyed by the success of its Venus discovery in Namibia, French oil major TotalEneries (NYSE:TTE) is planning to launch a drilling campaign in South Africa’s West Coast abutting the Namibian offshore block containing the supergiant find. 

Ghana Wants to Pay for Oil with Gold. Ghana’s government is seeking to formalize a new policy that would allow the use of gold rather than U.S. dollars to buy oil products, as the African country’s international reserves have shrunk to a mere $6.6 billion, down by a third year-on-year. 

Blackout Halts Ukraine’s Largest Steelworks. Amidst Russia’s ongoing missile strikes on power generation infrastructure, recurring blackouts have halted production at Ukraine’s largest steelworks operated by ArcelorMittal (AMS:MT) in Kryvyi Rih, with current power supply not enough to support production even at 20% capacity.

By Tom Kool for Oilprice.com

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