What to Watch

China Fires Warning Shot at U.S. Over Trade Barriers

 Investors woke up to a brand new trade skirmish on Friday as China launched a countermeasure to the Trump administration’s move to levy about $60 billion in tariffs on imports from the Asian country.

In a measured response, Beijing imposed higher duties on $3 billion in U.S. goods, from fruit and pork to recycled aluminum and steel pipes.

As of now the country is holding back on levies against big-ticket U.S. exports to China such as soybeans, sorghum and Boeing airplanes.

Analysts warn that a trade dispute between the world’s two biggest economies could have far reaching effects, reports Dan Molinski.

“The stated goal of this is to put pressure on China to address potential issues with intellectual property rights and its trade imbalance,” said Harm Bandholz at UniCredit Bank in New York, adding however that “once the slippery slope of protectionism has been stepped on, it is hard to know where it will stop.”

Mr. Trump’s appointment of John Bolton, a well-known foreign policy hawk, to be the next U.S. national security adviser is adding to the turmoil, analysts said.

Earlier, the White House left in place steel and aluminum tariffs against imports from China, Russia and Japan but granted temporary exclusions for six nations and the European Union.

Still, experts are concerned about the trade barriers and their effect on the energy sector.

The U.S. tariffs raised concern that the barriers  to trade on steel could hurt the oil industry due to the coming need for the metal to build new pipelines and other infrastructure.

Meanwhile, oil prices edged up on Friday even as global stock markets were dragged down by the U.S.-China trade row.

Brent crude, the global oil benchmark, rose 0.28% to $69.10 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.51% at $64.61 a barrel.

 

Energy News

U.S.-European Division Clouds Effort to Salvage Iran Nuclear Deal

A disagreement between Washington and Europe over a key Trump administration concern about the Iran  nuclear agreement threatens to scuttle efforts to preserve the international accord. Adding to the uncertainty, several key U.S. officials who have been involved in negotiations may leave the Trump administration by May 12, when Mr. Trump faces a deadline to extend sanctions relief granted to Iran under the nuclear deal.

China Pressures Vietnam to Give Up Oil Project

 China flexed its muscles and forced Vietnam to halt oil exploration in the South China Sea, Reuters reported. Spain’s Repsol, a partner in the venture, stands to lose $200 million due to the aborted project

“Iran has formidable cyber capabilities that it could potentially deploy against [Saudi Arabia] in the event that hostilities intensify”

– Analysts for RBC Capital Markets

How Two Wells in Wyoming Explain the Natural-Gas Glut

 In the U.S. a cold winter and high demand for heating gas has failed  to raise gas prices due to too much supply, write Ryan Dezember and Stephanie Yang. Meanwhile, Malaysia’s Petronas announced its involvement in TransCanada’s plan to expand its gas pipeline system in Western Canada.

Big Number

2019

Saudi Arabia’s Energy Minister Khalid al-Falih said the cooperationbetween the Organization of the Petroleum Exporting Countries and external producers such as Russia to eliminate global supply should be maintained until 2019.

FutureCurve

Today: The oil-services firm Baker Hughes releases data on the number of active U.S. rigs drilling for oil.

April 18–19: IQPC hosts the Oil & Fuel Theft Summit in Geneva. Speakers include Mahmoud Al-Bayati, the director general for counter-terrorism for Iraq, William J. Waggoner, the Chief Executive Officer for the Mexico Petroleum Company and Daniel Gianfalla, a member of the national maritime security advisory committee at the U.S. Department of Homeland Security.

Reporter’s Notebook

WSJ reporter Dan Molinski on Guyana’s attempt to use oil as a geopolitical deterrent. A recent effort by Guyana to attract investment from national oil companies isn’t a slight against privately-owned, international oil companies, according to Sam Benstead, Latin America analyst with Verisk Maplecroft. He noted Guyana’s minister of natural resources, Raphael Trotman recently said he’d negotiate directly with national oil companies on certain offshore blocks, which admittedly may lead to better financial terms for the national firms over international oil firms. But the overarching aim is “to build a de-facto diplomatic/military alliance to protect Guyana’s territorial sovereignty against potential Venezuelan intervention” that would benefit international oil firms too, Benstead says. “For example, a move against Exxon Mobil would not necessarily prompt a U.S. response, but a move against Petrobras would almost certainly prompt Brazilian response.”

The WSJ’s Erin Ailworth on investments into renewable energy.Duke Energy said it plans to invest $11 billion from 2017 to 2026 on new power generation fueled by natural gas, wind and solar. It is also exploring the possibility of extending operating licenses for its nuclear plants. Such “zero and lower CO2-emitting” resources, DUK said in a report released Thursday, will help the company in its goal to reduce carbon dioxide emissions 40% by 2030. By 2030, DUK also expects that more than 80% of its power mix will be made up of such resources.