What to Watch

Americans Face Highest Pump Prices in Years

Americans drivers are feeling the pinch of rising oil  prices at the pump, as major oil producers push to eliminate supply and rebalance the market, writes The Wall Street Journal’s Stephanie Yang.

“This summer, in terms of average gas prices, will likely be the highest since 2014,” said Patrick DeHaan, petroleum analyst at GasBuddy, a fuel-tracking app. “There’s been very little question about that.”

Crude prices have jumped thanks to continuing production cuts by the Organization of the Petroleum Exporting Countries and other major oil producers, including Russia, that agreed to collectively limit output two years ago.

U.S. oil futures have risen about 40%, and gasoline futures are up 8.6% this year.

As a result, gasoline is also becoming more expensive. According to the U.S. Energy Information Administration, average regular retail gas prices reached $2.70 a gallon last week—the highest level since 2015.

Meanwhile, oil prices ticked up Monday morning, even as U.S.-China trade tensions lingered and rig activity in the U.S. pointed to production growth.

Energy News

Saudi Delegation Culminates U.S. Tour with Return to Oil Roots

After a charm offensive tour in the U.S., a Saudi delegation led by Crown Prince Mohammed bin Salman concluded its nearly three-week trip by signing an initial  agreement worth up to $10 billion with Honeywell to develop plans for a U.S.-based petrochemical plant.

Battle Over Oil Driller Tests Mexico’s Pledge to Level Playing Field for Energy Firms

U.S. shareholders of the oil drilling company Oro Negro are accusing Mexico’s state oil company of fraud and discrimination in an arbitration complaint against Mexico under the rules of the North American Free Trade Agreement. The move comes after Oro Negro filed for bankruptcy protection last year after slumping crude prices prompted state oil company Petróleos Mexicanos to slash the day rates it pays drillers, and eventually cancel Oro Negro’s contracts.

“There are…a lot of good reasons to be bullish [about] oil but they are currently all being Trumped by the China-U.S. trade war concerns at the moment.”

– Bjarne Schieldrop, chief commodities analyst at SEB Markets

WSJ Energy In-Depth

Mining Company Suffers Setback in Battle Over Guinea’s Iron-Ore Field

BSG Resources Ltd., the mining company formerly controlled by Israeli tycoon Beny Steinmetz, has suffered a legal setback in its efforts to win compensation for being stripped of the rights to one of the world’s richest iron-ore deposits, writes the WSJ’s Scott Patterson.

The dispute over Guinea’s highly prized iron-ore field, named after the West African nation’s remote Simandou mountain range, has been one of the most contentious in the mining industry over the past decade.

It has involved allegations of corruption and some of the industry’s biggest names.

Guinea, in 2014, withdrew BSGR’s mining rights at Simandou, alleging bribes were paid to win the concession. BSGR rejected the claim and challenged the Guinean government’s decision at the World Bank’s International Centre for Settlement of Investment Disputes, or ICSID.

ICSID, the globally recognized arbiter, has declined to eliminate evidence that BSGR wanted excluded from the hearing.

Big Number

890,000

Kinder Morgan Inc. threatened on Sunday to halt its proposed expansion of the Trans Mountain pipeline unless Canada’s local and national officials resolve their clash over whether the pipeline should be built.

The planned pipeline would flow from the province of Alberta’s oil sands to a Pacific coast port near Vancouver and is expected to nearly triple the amount of crude transported to 890,000 barrels a day.

FutureCurve

Tuesday: API issues forecasts on the U.S. crude inventory.

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 of 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

The WSJ’s Alison Sider looks at the likelihood that China will target U.S. oil exporters. China could eventually target U.S. oil exports in an escalating trade battle, according to Standard Chartered analysts. China has become a major market for sales of U.S. crude abroad, accounting for about a quarter of shipments this year. But the U.S. accounts for a relatively small share of China’s oil imports–just 4%, the analysts said. That “strong asymmetry” means tariffs are not out of the question. “A tariff would not necessarily cause a significant bottleneck for U.S. shale output, but would likely complicate marketing significantly and increase its discount on international markets,” Standard Chartered said.

WSJ reporter Dan Molinski on the rise of U.S. oil rigs. The number of active, oil-directed rigs in the U.S. surged by 11 in the latest week to 808, the highest total in three years, according to the latest report from Baker Hughes, as relatively high and mostly steady oil prices have incentivized more drilling activity. The report showed that in terms of regions, the mighty Permian Basin of West Texas added two active oil rigs to 444, matching a more-than-three-year total high, while South Texas’s Eagle Ford also added two oil rigs, to reach 66.