Power Up: Oil market on hold ahead of Ukraine talks

Aug 18 - By Liz Hampton

U.S. energy markets editor

Hello Power Up readers! Oil prices are down slightly to start the week ahead ofU.S.-Ukraine talks following Friday's inconclusive meeting between U.S. President Donald Trump and Russian President Vladimir Putin. Crude had closed Friday's session down $1 as traders awaited that meeting in Alaska. More on that below.

Global benchmark Brent futures were trading at 65.58 a barrel on Monday, down 27 cents, while U.S. West Texas Intermediate (WTI) futures were at $62.43 a barrel, off 36 cents. U.S. Henry Hub natural gas futures were at $2.894 per million British thermal units, down less than 1%.

FOCUS SHIFTS TO U.S.-UKRAINE TALKS

After Friday's meeting between Trump and Putin yielded no peace deal, the market focus has shifted to a meeting later today in Washington between Ukraine's President Volodymyr Zelenskiy and the U.S. president . European leaders will also be in attendance.

Recall, a February meeting between the two leaders resulted in a shouting match over whether Zelenskiy was showing enough gratitude for support from the United States. Even his outfit was the subject of scrutiny.

Trump has told Zelenskiy that Putin had offered to freeze most front lines if Ukraine ceded all of the Donetsk region - a demand Zelenskiy rejected. He's urged the Ukrainian president to drop Crimea and NATO hopes.

The outcome of Monday's meeting could have major implications for global energy flows, as Russia has faced sanctions and a cap on its oil prices over its conflict in Ukraine.

Trump has threatened secondary sanctions and tariffs on countries buying Russian oil - like India and China - if moves were not made to end the war, but is currently holding off any such action.

On Friday, meanwhile, Putin signed a decree that would allow foreign investors - including Exxon Mobil - to regain shares in the Sakhalin-1 oil and gas project. Exxon previously held a 30% stake in that project, but exited the project following Moscow's invasion of Ukraine. Other Western companies, like Halliburton and Baker Hughes, also wound down operations following the 2022 invasion.

Even as talks between the U.S. and Ukraine remain in focus, the conflict on the ground continues. Russian crude flows to Hungary and Slovakia through the Druzhba pipeline were stopped on Monday, for what Budapest said was a Ukrainian attack on the network.

VENTURE GLOBAL'S BIG WIN

U.S. liquefied natural gas exporter Venture Global booked a big win last week when it triumphed over Shell - one of several customers with which it has a pending dispute - in an arbitration claim over the country’s No.2 LNG producer’s failure to deliver contracted cargoes.

The disputes stem from 2023, when Venture Global was set to begin delivering contracted long-term cargoes from its Calcasieu plant in Louisiana to a series of customers, including BP, Shell, Galp and Edison. The company said it was unable to deliver the cargoes due to a faulty electric system that did not allow its plant to operate optimally.

The LNG producer instead sold cargoes on the spot market for a higher price than those agreed to under long-term contracts.

In an earnings call last week, the Arlington-based company said it anticipated winning the remaining cases because the contracts, and issues at hand, were similar to those in the Shell case.

Venture Global is currently the second largest U.S. LNG exporter, behind Cheniere, but anticipates nabbing the top spot by 2027. The company aims to produce over 100 million metric tons a year of LNG by 2030, CEO Mike Sabel said last week.

ESSENTIAL READING:

The former CEO of Mexican state oil company Pemex, Carlos Trevino, has been arrested in the United States and will be deported, Mexican President Claudia Sheinbaum said. The arrest is related to an accusation of bribes accepted in exchange for authorizing a contract of an ethylene plant linked to Brazilian conglomerate Odebrecht’s Braskem facility. Trevino was appointed as Pemex CEO in November 2017.

The first of Venezuelan oil cargoes exported by Chevron following its new authorization to operate in the country has set sail for the United States, Marianna Parraga reported on Friday. One is headed to the U.S. West Coast, while the other is on the way to Port Arthur, Texas. The U.S. Treasury Department granted the new license in late July, allowing the U.S. oil major to operate in the sanctioned country.

Britain will not provide financial support to its struggling bioethanol industry, the government said on Friday, after it took a hit from a tariff deal with U.S. President Donald Trump. Under the trade deal, the UK’s 19% tariff on U.S. ethanol fell to zero, through a 1.4 billion-litre quota. That figure is equal to the size of the UK’s entire ethanol market.

U.S. solar company T1 Energy has reached a deal with specialty glass maker Corning that will create a fully domestic solar supply chain, the companies said on Friday. The deal will help satisfy growing domestic demand for solar panels from American-made components.

The U.S. oil and gas rig count was unchanged last week, oilfield services firm Baker Hughes said on Friday. The rig count – an indicator of future production growth - is currently at 539. Oil rigs rose by one and gas rigs fell by one.

We hope you're enjoying the Power Up newsletter. We'd love to hear your thoughts and feedback. You can reach us at: powerup@thomsonreuters.com.