What to Watch

The Secretary of State’s Departure Could Be Good for Crude Prices

President Donald Trump‘s decision to fire Secretary of State Rex Tillerson could tilt the balance of U.S. foreign policy against major oil producers Iran and Venezuela, thereby boosting oil prices, say analysts.

The White House’s move to replace Mr. Tillerson with CIA Director Mike Pompeo could spell the end for the 2015 international agreement to curb Iran’s nuclear program.

If the U.S. were to exit the deal, it would likely result in the re-imposition of economic sanctions on Iran that would limit its oil exports and reduce global supply, analysts said.

“The Rexit scenario is bullish for oil because Pompeo is a known hawk against Iran and I think he will embolden Donald Trump to exit the nuclear agreement when he has to make the decision [in] May,” said Helima Croft, head of global commodity strategy for RBC Capital Markets.

Mr. Pompeo has been deeply critical of the Iran deal in the past, and has also voiced support for imposing further energy sanctions against embattled OPEC member Venezuela.

Additional U.S. measures against Venezuela  could reduce the country’s output by more than 1 million barrels per day, noted analysts for RBC Capital Markets in a recent note.

Market watchers have long been warning that this year a tightening oil market could become more vulnerable to geopolitical supply shocks which would have had a marginal impact in a world with surplus oil.

Meanwhile oil prices edged higher on Wednesday ahead of the latest U.S. inventory data which is expected to show a rise in crude stocks, in line with seasonal trends.

Brent crude, the global oil benchmark, was up 0.2% to $64.76 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.3% at $60.87 a barrel.

Energy News

Maryland Company to Pay $2 Million to Resolve Bribery Charges

Maryland-based Transport Logistics International Inc., which U.S. authorities accused of bribing a Russian nuclear-energy official in exchange for uranium-shipping contracts, agreed to pay $2 million to resolve criminal charges, according to court documents.

Gasoline Prices Fall in Wake of EPA Deal with Bankrupt Refiner

Traders faulted a deal to ease a bankrupt refiner’s obligation to buy credits to comply with environmental regulation with tanking gas prices  on Tuesday. Philadelphia Energy Solutions, a major East Coast refiner, and the Environmental Protection Agency struck a deal as part of the company’s bankruptcy proceedings, slashing the number of renewable-fuel credits the company needs to buy.

“I’ll now return to private life as a private citizen.”

– Rex Tillerson U.S. Secretary of State

Exxon Says It May Pay Australian Taxes in 2021

Exxon was questioned by Australian lawmakers at a hearing on tax avoidance, as the firm has paid zero in tax since 2013 despite earning billions of dollars in the country. The company said it is in a tax loss position in Australia because of major investments it made into gas production, but it anticipates it will resume corporate tax payments from 2021.

WSJ Energy In-Depth

Mediterranean Gas Bounty Suddenly Seems Within Big Oil’s Reach

Big oil companies are pushing into Mediterranean waters off Israel, Lebanon and Egypt after years of U.S. diplomacy helped break open a political logjam around giant Middle Eastern natural-gas discoveries, write the WSJ’s Rory Jones, Sarah Kent and Bradley Olson.

Exxon Mobil Corp., Royal Dutch Shell PLC, Total SA and others are planning to invest in exports and exploration in the Eastern Mediterranean. Their prospects were buoyed by a landmark contract last month between U.S., Israeli and Egyptian firms that breathed new life into the regional market.

The total natural-gas reserves in the waters off Israel, Cyprus and Egypt are estimated at 125 trillion cubic feet, according to Wood Mackenzie, the Scottish energy consultant. That is enough to meet U.S. demand for almost five years.

Big Number

76

Physicist Stephen W. Hawking died Wednesday at the age of 76 in the U.K. During his career he came up with the theory that energy could escape from a cosmic phenomenon called a black hole, the result of the collapse of a massive star.

FutureCurve

Today: OPEC will release its monthly oil market report. Also the U.S. Energy Information Administration releases production figures.

Thursday: The International Energy Agency issues an oil market report

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, chief executive of the Mexico Petroleum Company.

Reporter’s Notebook

WSJ correspondent Nicholas Bariyo on France’s oil giant. Total SA is advancing its oil projects steadily in Uganda and hopes to reach a final decision on investment in the country during 2018, with output of crude expected about 36 months later, says Adewale Fayemi, head of Total’s Ugandan unit. Total is closer to developing oil fields in two blocks, and is in the process of training hundreds of locals to work on its projects in the country and along the 800-mile oil-export pipeline, Mr. Fayemi says. It’s a boost for the long-delayed development of Uganda’s 6.5 billion barrels of crude reserves amid improving oil prices. Total, along with China’s Cnooc Ltd., requires $8 billion to develop the oil fields, the output of which could peak at 230,000 barrels a day of crude by 2023.

The WSJ’s March Navarro on corporate earnings. E.On’s adjusted net income in its fourth quarter was 38% higher than consensus expectations, which in CFRA’s opinion reflects a better-than-expected performance from its renewable-energy business. According to the brokerage, favorable wind conditions and the commissioning of new wind farms in the U.S. helped E.On offset the deterioration of its energy-retail business. CFRA analysts also say the German company’s 27% net debt reduction during 2017 is reassuring. However, the equity research firm expects near-term share performance to be dictated by the progress of E.On’s acquisition of Innogy.