A price war may be looming in the global oil market as rising output from OPEC+ and the Middle East boosts the competitiveness of the region’s shipments, potentially forcing other suppliers to discount their barrels. The warning signs can be seen in the widening of a key price spread that’s used by traders to determine the affordability of cargoes from the Middle East against Brent-linked barrels. Right now, the gap is close to the widest it has been in more than 16 months, and that doesn’t bode well for oil that’s priced against Brent.

The oil and gas industry has been at odds with Joe Biden and his Administration since his first policies hampered their development goals. Things got bad this past week when it was revealed Biden’s $2 trillion infrastructure and tax plan proposes to eliminate tax preferences and implicit subsidies for fossil fuels that would boost government receipts by more than $35 billion over the next decade. But things got worse when the financial times reported that methane emissions from the sector have already surpassed pre-pandemic levels while production itself is still roughly 2 million bpd shy of those pre-crisis levels. While this is certainly not the direction the fossil fuel industry wants to be headed, the battle goes on.

Following hectic trade movements on Thursday, oil prices settled with gains of more than 3% for the day after OPEC+ signaled with its latest oil production decision that it believes in the global oil demand recovery through the summer. According to sources, OPEC+ is considering increasing output by 350,000 barrels per day in May, 350,000 bpd in June and 400,000 bpd in July while Saudi Arabia is preparing to support extending cuts into June and is also ready to prolong its own voluntary cuts to boost prices amid a new wave of coronavirus lockdowns.

On Tuesday, a gargantuan 400-metre cargo ship named the Ever Given ran aground in the Suez Canal, blocking maritime traffic from entering or exiting the crucial shipping highway due to strong winds from a sandstorm that restricted visibility. The canal is the carotid artery of the global shipping system with around 12% of worldwide shipping traffic flowing through its narrow waters, including roughly 5% of globally traded crude oil. With 237 vessels waiting in the area on Friday – 107 at Port Suez in the Red Sea, 41 at the canal’s midway point in the Great Bitter Lake, and 89 at Port Said in the Mediterranean – the blockage is costing an estimated $9.6 Billion in goods each day.

A report released this past week by the Climate Action Tracker suggests the United States needs to reduce its national emissions by at least 57-63% below 2005 levels by 2030 and provide support to other countries in order to be consistent with the Paris Agreement 1.5°C limit. The report further suggests that President Biden’s actions in the transportation and building sector need to be as stringent as his policies for decarbonizing the U.S. power sector by 2035 if the emissions targets are to be reached. Luckily, the report spells good news for Summit Carbon Solutions $2 billion pipeline project currently in development that will carry carbon dioxide captured from ethanol refineries scattered across the Midwest to a site in North Dakota where it will be pumped thousands of feet underground.