Connect with us

Spread & Containment

Did the Russia-Saudi bloc weaken at OPEC+?

Oil prices plunged earlier this week as reports of a rift between Russia and OPEC emerged ahead of the OPEC+ meeting held last week. The report suggested…

Published

on

Oil prices plunged earlier this week as reports of a rift between Russia and OPEC emerged ahead of the OPEC+ meeting held last week. The report suggested that Saudi Arabia could push to ‘exempt’ Russia from the OPEC+ deal, because of Russia’s deep cuts in production and failure to meet agreed-upon quotas.

Since the outbreak of the Ukraine war, global oil supplies have been gravely distorted. One of the core reasons has been relentless western pressure on Russia’s primary export. Today, Russian crude production is already 1 million barrels per day (bpd) below its OPEC quota.

With EU sanctions coming into place, some analysts believe that Russian production could fall by as much as 3 million bpd through the rest of the year.

As Mr.Barkindo, the OPEC Secretary-General had noted earlier in the month, “What is clear is that Russia’s oil and other liquids exports of more than 7 million bpd cannot be made up from elsewhere”.

For now, it seems the report by a leading American newspaper was merely wishful thinking.

Why wishful thinking?

To no one’s surprise, the consequent shortages of sanctions on Russia have reverberated through the markets, and American-led measures have boomeranged to cause significant hardship at gas stations around the country.

With Biden’s America reeling under sky-high inflation and the hotly contested mid-terms just around the corner, the President has been desperate to reduce prices at the pumps, with 59% of voters polled blaming current policies for their predicament.

With gasoline prices reaching record highs of nearly $5 a gallon, the US has been repeatedly pressuring the Saudi government and the UAE authorities to turn on the taps, so to speak, disregard the assigned quotas and ramp up production.

This has been to no avail, as OPEC+ has stood staunchly behind the deal.

If the Russian-Saudi alliance had weakened as per reports, OPEC+ would likely disintegrate, paving the way for increased production. Theoretically, this would quench the market’s thirst and quell price pressures at the pumps in the US.

With the Democratic party’s immediate political future at stake, the administration has tried to bring down price pressures but to no avail. Proposals have included a federal gas tax holiday, capping record-high exports, easing environmental limits, restarting closed refineries, and pressuring private companies to boost production.

For pragmatic or political reasons, each of these options has proved to be a non-starter. With the clock ticking, infighting has escalated in the Democratic camp with Claudia Sahm, a member of President Obama’s Council of Economic Advisers describing it as there being, “…a kind of defeatism.”

Did Ukraine really creep up on America’s Gasoline Prices?

The Ukraine invasion put a huge spanner in the works of the global economy. Oil prices were the first to be affected.

However, this was not as unforeseen as is often suggested. The energy sector has been a calamity-in-waiting for some time. Lackluster investments, weak exploration and production, and delays in the up-gradation of aging infrastructure have been flagged for the better part of a decade. To add this to pressure, since the covid outbreak, there have been mass layoffs and the closure of key refineries, aggravating a structural deficit.

Source: United States Industrial Production: Nondurable Goods: Petroleum refineries Index 2012=100 SA from TradingEconomics.com

With prices rising and insufficient supply, in desperation, the US had released huge volumes from the strategic reserves, but the effect on prices has proved temporary.

Unsurprisingly, the dissolution of OPEC+ would be a captivating outcome State-side, with Amrita Sen, Founding Partner and Chief Oil Analyst at Energy Aspects, saying that “this is what the US administration would like to happen.”

Au contraire, the US has not helped its case by pushing for the enactment of the controversial No Oil Producing and Exporting Cartels (NOPEC) bill, which is designed to give the United States the ability to file lawsuits against OPEC members for keeping production intentionally low.

Expectedly, there was a backlash by OPEC’s top brass, arguing that this unprecedented measure could hamper the pre-existing supply chains.

The Saudi government has close historical links with Russia and overlapping interests, especially in Turkey. Under the added pressure of the US, the No.1 and No.2 producers of crude oil in the world, continued to collaborate. Indeed, earlier this week, foreign ministers Lavrov and Faisal bin Farhan Al Saud “praised the level of cooperation in the OPEC+ format” and the “stabilizing effect” on the market.

Yet, on reports of the crumbling of the global oil architecture, prices dropped by a steep $7 – $8 in a single day but quickly recovered.

OPEC+ treading the middle path

During yesterday’s proceedings, Saudi Arabia’s role was pivotal in securing higher production quotas, rising from 432,000 additional bpd per month to nearly 650,000 bpd through July and August. The significant increase has placated the US side while Russia’s continued inclusion has kept OPEC+ intact.

The OPEC members have indicated that the change in stance was largely in response to the winding down of Chinese lockdowns in major centers such as Shanghai.

However, the reality is that despite the higher quotas, Saudi Arabia and the UAE are the only two countries with any kind of spare capacity.  According to Amrita Sen, volumes will be “very very minimal…we are expecting over the two months only about 560,000 to come to the market…and doesn’t really solve the deficit”.

Optics-wise, this is still a good outcome for Biden in the lead-up to the November elections. In a bid to facilitate a further meeting of the minds, the President will be visiting Saudi Arabia for the first time since taking office in the coming weeks.

Will the Increase in Quotas Help the USA?

The irony is that any positive impact on production will have a very limited effect on what consumers are facing. Although the raw crude market is tight, the downstream refined market is much tighter, and that is where the problem arises for everyday Americans.

Any additional flows can likely not be used in the West due to a lack of refining capacity, which has been slashed since the pandemic.

Without the spare capacity to process raw crude, the bottlenecks are unlikely to resolve any time soon. Moreover, operating rates in the US are in the nineties, an unsustainably high level that can’t be maintained for long.    

The EU has the same difficulty, having dismantled large sections of its refining capacity in the last two years. In some ways, the EU is worse off because continental refineries do not have the technology to cater to high sulphuric Middle Eastern variety inputs.

Refinery Capacities and Broken Self-Adjustment

During the pandemic, there has been a decisive shift in refining capacity from the West to Asia.

Gasoline prices are poised to stay high with the demand pressure during the summer driving season beginning in the US, China’s unwinding of its prolonged lockdown, EU sanctions on 90% of Russia’s oil contracts, and the unending conflict in Ukraine.

In the US, to lower prices, it is crucial to bring refinery capacity back online.

However, this is easier said than done. Profit generation could take a decade. Even at currently elevated prices, projects are likely to not be financially viable as investors anticipate a slowing global economy and the possibility of a deep recession to drag down demand.    

The current confluence of factors suggests that there is no easy fix to get more refined products to everyday Americans.

Oil prices and refining rates tend to be circular and self-adjusting. As demand rises, prices rise, supply responds and this brings prices down. When demand is low, prices stay low, supply falls, and this leads to an improvement in prices. Today, because there is an expectation of a deep fall in demand, this mechanism may be short-circuited, leading to prices staying elevated due to a lack of increased supply.

Ironically, an expected loss in demand, rather than accelerating a fall in price, may keep prices elevated by dissuading investments in refining capacity.

World-renowned energy expert, Dan Yergin believes that the US can improve its supply situation “but not overnight. In other words, it’s doable, but it takes a lot of coordination to make it happen.” This places the Biden administration in a difficult position, raising expectations of what the agenda during the Saudi visit may entail.  

Is there room for prices to fall?

This is not likely in the short-term, at least not until a new OPEC+ agreement is negotiated later this year, surging supplies if Biden has a successful visit to the Kingdom or a sudden demand collapse in China.

The one major downside risk comes from the possibility of an all-out demand collapse due to a deep recession, with the Federal Reserve hiking into a bear market.  

However, the credibility of the Fed is not what it once was, and the very real possibility of a reversal of policy normalization and quantitative tightening still looms large.

Another factor may be the wider use of ESG metrics and climate activism, which may slow new facilities from coming online in countries like the United States.

The wild card in the pack may be Germany, which is struggling with 8.7% inflation. Having experienced the horrors of hyperinflation in the 1920s, social attitudes are highly averse to inflation.  Switching to a sustainable and cost-effective substitute for Russian energy supplies may prove more challenging than expected. It would be interesting to see if the implementation of the EU sanctions proceeds as planned towards the end of 2022.

Outlook

With the deep deficit of refining capacity among western countries, crude prices will stay elevated for the foreseeable future. If China can recover its growth, this could amount to an additional one million bpd of crude demand.

In a change of strategy and amid environmental concerns, China has been reducing its refined exports adding to the tightness.

Since yesterday, crude prices are running hot with WTI rising to $117 at the time of writing, while the EIA reported a sharp decline in gasoline inventories compared, and US crude inventories being approximately 15% below the 5-year historic average.

Global supply is only expected to get tighter with US plans of deploying howitzers and rocket launchers to Ukraine, fuelling concerns of an escalation in the region.  

Amrita Sen re-iterated that on the ground, the OPEC+ agreement would only add “minuscule volumes” to market supply, and of course, side-steps the refinery issues.

In her view, with China coming out of lockdown, we are likely to see “1.5 million bpd of negative drawdowns in Q3, which we just don’t have”, meaning that “prices have to rise.”

With the rising demand and bottlenecks such as in US refinery labor supplies, prices will almost certainly rise to between $120- $130 as of the end of the OPEC+ agreement in August, with a possible upside as gasoline demand rises in the summer.

The post Did the Russia-Saudi bloc weaken at OPEC+? appeared first on Invezz.

Read More

Continue Reading

Spread & Containment

Las Vegas Strip Gets a Brand New Technology

It’s not just Caesars and MGM innovating on the Strip. A number of other companies are trying big idea.

Published

on

It's not just Caesars and MGM innovating on the Strip. A number of other companies are trying big idea.

Las Vegas has quietly become a hotbed for innovation. Some of that has been driven by the major casino operators -- Caesars Entertainment (CZR) - Get Caesars Entertainment Inc. Report, MGM Resorts International (MGM) - Get MGM Resorts International Report, Resorts World Las Vegas, and Wynn Resorts (WYNN) - Get Wynn Resorts Limited Report -- trying to outdo each other to win over customers.

Some innovations are ostentatious and hard to miss, like the MSG (MSGE) - Get Madison Square Garden Entertainment Corp. Class A Report Sphere being built at the Venetian. That first-of-its-kind concert venue looks as if it dropped to Earth from a technologically advanced civilization, and it has raised the bar for performance venues.

Many innovations, however, aren't as obvious. Caesars, for example, uses an artificial intelligence text-based concierge that's surprisingly effective. "Ivy," as it goes by, can answer questions, help with mundane tasks like getting clean towels delivered, or advance your issue to a human where needed.

Innovations big and small are happening up, down, and under the Las Vegas Strip. Elon Musk's Boring Co. has been building a network of tunnels under the city that will eventually use driverless Tesla  (TSLA) - Get Tesla Inc. Report electric vehicles to ferry people all over the city. 

That's a revolutionary idea -- but now a rival has emerged.  

Image source: Daniel Kline/TheStreet

Musk Goes Low, Lyft Goes High?

Musk's Boring Co. has a bold plan for more than 50 stations connecting the Las Vegas Strip to the airport, the Convention Center, Allegiant Stadium, and Fremont Street using driverless Teslas. 

Currently, only a small portion of that network has been built -- a section connecting the two halves of the Las Vegas Convention Center (and one connecting Resorts World Las Vegas to that same location.

For Musk and Boring Co., it's all about taking traffic off the city's busy streets and bringing it underground.

"During typical peak hours, driving from the Las Vegas Convention Center to Mandalay Bay, for example, can take up to 30 minutes. The same trip on Vegas Loop will take approximately 3 minutes," the company says on its website.

If Musk's plan is fully built, it'll effectively give Las Vegas a modern subway, helping alleviate road congestion. It will not, however, stop tourists from using ride-share and taxi cabs.

Now, ride-share company Lyft  (LYFT) - Get Lyft Inc. Report has brought a solution to Sin City that may ultimately help it solve another problem: a shortage of taxi and ride-share drivers. 

Lyft Brings Driverless Cars (Sort of) to Las Vegas

Labor in Las Vegas has been in short supply since the pandemic hit. Some people left the city and others found work outside the service-industry jobs that fuel the Las Vegas economy. At times, that has made the wait for a cab, or a ride-share from Uber (UBER) - Get Uber Technologies Inc. Report and Lyft, longer than usual.

Lyft plans to fix that by partnering with Motional to bring Motional's "Ioniq-5-based robotaxi, an autonomous vehicle designed for fully driverless ride-hail operation, to the Lyft network in Las Vegas," the ride-share company shared in a news release.

The Ioniq 5 is Hyundai's  (HYMTF)  prominent EV. Motional is the Boston joint venture between Hyundai and automotive-technology specialist Aptiv.  (APTV) - Get Aptiv PLC Report

"Launching Motional’s all-electric Ioniq 5 on Lyft’s network in Las Vegas represents tremendous progress in our vision to make an electric, autonomous, and shared future a reality for people everywhere," said  Lyft CEO Logan Green.

It's Self-Driving Lyfts, But...

There is, however, a pretty big catch.

"Each vehicle arrives with not one but two backup drivers standing by to take control of the car should anything go wrong" Casino.org's Corey Levitan reported.

Lyft has promised a truly driverless system at some point in 2023, but current laws and the state of driverless technology make the backups necessary.

Motional and Lyft have quietly been testing driverless vehicles in Las Vegas since 2018. In the news release, Lyft explained how the system works.

"This means riders are able to easily control their ride without assistance from a driver. The enhanced experience includes unlocking the doors through the Lyft app and starting the ride or contacting customer support from the new in-car Lyft AV app, an intuitive in-ride display tailored to autonomous ride-sharing," the company said.

Lyft and Boring Co. are not working together. But if Musk's plan takes vehicles off Las Vegas's streets, the new program makes the experience better for any that remain. 

Ride sharing and taxis will continue to cost significantly more than using Boring Co's subway-like system, so it's easy to see how the two options will work well together.   .

 

  

Read More

Continue Reading

Spread & Containment

Elon Musk’s Las Vegas Strip Plan Has Some Competition

It’s not just Caesars and MGM innovating on the Strip. Elon Musk has been tunneling under Las Vegas to solve a big problem, and now he has a rival.

Published

on

It's not just Caesars and MGM innovating on the Strip. Elon Musk has been tunneling under Las Vegas to solve a big problem, and now he has a rival.

Las Vegas has quietly become a hotbed for innovation. Some of that has been driven by the major casino operators -- Caesars Entertainment (CZR) - Get Caesars Entertainment Inc. Report, MGM Resorts International (MGM) - Get MGM Resorts International Report, Resorts World Las Vegas, and Wynn Resorts (WYNN) - Get Wynn Resorts Limited Report -- trying to outdo each other to win over customers.

Some innovations are ostentatious and hard to miss, like the MSG (MSGE) - Get Madison Square Garden Entertainment Corp. Class A Report Sphere being built at the Venetian. That first-of-its-kind concert venue looks as if it dropped to Earth from a technologically advanced civilization, and it has raised the bar for performance venues.

Many innovations, however, aren't as obvious. Caesars, for example, uses an artificial intelligence text-based concierge that's surprisingly effective. "Ivy," as it goes by, can answer questions, help with mundane tasks like getting clean towels delivered, or advance your issue to a human where needed.

Innovations big and small are happening up, down, and under the Las Vegas Strip. Elon Musk's Boring Co. has been building a network of tunnels under the city that will eventually use driverless Tesla  (TSLA) - Get Tesla Inc. Report electric vehicles to ferry people all over the city. 

That's a revolutionary idea -- but now a rival has emerged.  

Image source: Daniel Kline/TheStreet

Musk Goes Low, Lyft Goes High?

Musk's Boring Co. has a bold plan for more than 50 stations connecting the Las Vegas Strip to the airport, the Convention Center, Allegiant Stadium, and Fremont Street using driverless Teslas. 

Currently, only a small portion of that network has been built -- a section connecting the two halves of the Las Vegas Convention Center (and one connecting Resorts World Las Vegas to that same location.

For Musk and Boring Co., it's all about taking traffic off the city's busy streets and bringing it underground.

"During typical peak hours, driving from the Las Vegas Convention Center to Mandalay Bay, for example, can take up to 30 minutes. The same trip on Vegas Loop will take approximately 3 minutes," the company says on its website.

If Musk's plan is fully built, it'll effectively give Las Vegas a modern subway, helping alleviate road congestion. It will not, however, stop tourists from using ride-share and taxi cabs.

Now, ride-share company Lyft  (LYFT) - Get Lyft Inc. Report has brought a solution to Sin City that may ultimately help it solve another problem: a shortage of taxi and ride-share drivers. 

Lyft Brings Driverless Cars (Sort of) to Las Vegas

Labor in Las Vegas has been in short supply since the pandemic hit. Some people left the city and others found work outside the service-industry jobs that fuel the Las Vegas economy. At times, that has made the wait for a cab, or a ride-share from Uber (UBER) - Get Uber Technologies Inc. Report and Lyft, longer than usual.

Lyft plans to fix that by partnering with Motional to bring Motional's "Ioniq-5-based robotaxi, an autonomous vehicle designed for fully driverless ride-hail operation, to the Lyft network in Las Vegas," the ride-share company shared in a news release.

The Ioniq 5 is Hyundai's  (HYMTF)  prominent EV. Motional is the Boston joint venture between Hyundai and automotive-technology specialist Aptiv.  (APTV) - Get Aptiv PLC Report

"Launching Motional’s all-electric Ioniq 5 on Lyft’s network in Las Vegas represents tremendous progress in our vision to make an electric, autonomous, and shared future a reality for people everywhere," said  Lyft CEO Logan Green.

An Important Caveat

There is, however, a pretty big catch.

"Each vehicle arrives with not one but two backup drivers standing by to take control of the car should anything go wrong" Casino.org's Corey Levitan reported.

Lyft has promised a truly driverless system at some point in 2023, but current laws and the state of driverless technology make the backups necessary.

Motional and Lyft have quietly been testing driverless vehicles in Las Vegas since 2018. In the news release, Lyft explained how the system works.

"This means riders are able to easily control their ride without assistance from a driver. The enhanced experience includes unlocking the doors through the Lyft app and starting the ride or contacting customer support from the new in-car Lyft AV app, an intuitive in-ride display tailored to autonomous ride-sharing," the company said.

Lyft and Boring Co. are not working together. But if Musk's plan takes vehicles off Las Vegas's streets, the new program makes the experience better for any that remain. 

Ride sharing and taxis will continue to cost significantly more than using Boring Co's subway-like system, so it's easy to see how the two options will work well together.   .

 

  

Read More

Continue Reading

Spread & Containment

Exosomes Could Improve Inhaled Therapeutics

Instead of disguising vaccines in synthetic lipid nanoparticles, researchers used exosomes as their drug delivery vehicles to the lung. The exosomes are…

Published

on

For respiratory diseases, from asthma to COVID-19, inhaled treatments can quickly deliver a drug to the desired target, the lungs. Global health depends on such treatments. As Kristen Popowski, a PhD candidate in comparative biomedical sciences at the North Carolina State University’s College of Veterinary Medicine in Raleigh, and her colleagues wrote: “Respiratory diseases are among the leading causes of morbidity and mortality worldwide, with coronavirus disease 2019 (COVID-19) remaining prevalent in the ongoing pandemic.”

Kristen Popowski [North Carolina State University]
Although lipid nanoparticles offer one delivery vehicle for such treatments, nature creates an obstacle. “The lung has natural defense mechanisms against inhaled particulates, and traditional lipid-nanoparticle vaccines present challenges in cytotoxicity and respiratory clearance,” says Popowski. “A nanoparticle formulation that can withstand these defense mechanisms remains a critical challenge.” So, Popowski and her colleagues explored an alternative approach.

“Instead of disguising vaccines in synthetic lipid nanoparticles, we utilize cell-secreted nanoparticles called exosomes as our drug delivery vehicles to the lung,” Popowski explains. “Our exosomes are secreted from native lung cells and are recognizable by the lung.”

Consequently, she says, “We can minimize pulmonary toxicity and clearance to better deliver and retain vaccines.” In addition, the exosome-based treatments developed by Popowski and her colleagues can be formulated as a dry powder that requires no refrigeration and can have a shelf life of 28 days.

Despite the incentives to take an exosome-based approach to inhaled treatments for respiratory diseases, turning that into a part of bioprocessing requires more research.

“Although commercial manufacturing of exosomes has recently shown extensive improvement, optimization of mRNA loading into exosomes remains a challenge,” Popowski says. “Endogenous mRNA expression through exosome engineering would likely be necessary for large-scale production.”

The post Exosomes Could Improve Inhaled Therapeutics appeared first on GEN - Genetic Engineering and Biotechnology News.

Read More

Continue Reading

Trending