Oil rose as President Donald Trump announced a trade framework with the UK, spurring some optimism about deals to come. West Texas Intermediate climbed 3.2% to approach $60 a barrel. Trump said the UK would fast-track US items through its customs process and reduce barriers on billions of dollars of agricultural, chemical, energy and industrial exports, including ethanol. Notably, the terms are limited in scope and a 10% baseline tariff remains. The British deal is raising investors’ confidence that agreements can be reached in the more complicated trade talks that lie ahead, specifically negotiations between US and Chinese officials kicking off this weekend. Trump said that the 145% levy against China, the world’s largest crude-importer, could be lowered if talks go well. “The real driver of risk assets today appears to be renewed optimism around progress in the US–China trade talks,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “It’s also worth noting that sentiment toward crude remains overwhelmingly bearish.” Crude has slid since Trump took office on concerns that his global trade war will dent economic growth and slow energy demand. Adding to the bearishness, OPEC+ has decided to revive idled output faster than expected. Already, the drop in oil prices is spurring American shale producers to cut spending in the Permian Basin. Still, small pockets of bullishness are visible in the options market. There was active trading of Brent $95 September call options, which profit when futures rise. The US on Thursday sanctioned a third Chinese “teapot” oil refinery and various other entities associated with Iran, days ahead of a fourth round of nuclear talks between Washington and Tehran. The failure of the negotiations could push Brent up toward $70 a barrel, Citigroup analysts including Eric Lee said in a note. In the US,

Indian liquefied natural gas importers have signed a flurry of long-term purchase agreements linked to the US price benchmark, the latest effort by the nation’s buyers to protect themselves from volatile markets. State-owned companies have signed at least four contracts since December, totaling nearly 11 million tons per year, priced to the Henry Hub index, according to the executives familiar with the deals. Until now, most of India’s long-term contracts have been linked to crude oil, the traditional way to price LNG deals. Pricing the fuel to the Henry Hub index doesn’t necessarily mean that the fuel will come from the US, rather it is a move to hedge risk.  India’s consumers — from power plants to petrochemical facilities — are highly price-sensitive as gas competes head-to-head with cheaper and dirtier alternatives. Companies that relied on the spot market or oil-linked contracts have periodically been forced to cut back purchases due to price spikes. US gas futures have also been relatively less volatile and more liquid than the Asian spot benchmark, the Japan-Korea Marker. “The last ten year average shows that there have been periods during winter months JKM benchmark surged beyond imagination, while Henry Hub prices saw proportionally smaller growth,” Bharat Petroelum Corp Ltd’s Director Finance V.R.K. Gupta said. BPCL in February signed a deal with ADNOC Trading for 2.5 million tons of LNG for five years. The Mumbai-based refiner will evaluate the performance of the deal and may sign more such contracts, Gupta said.  Indian Oil Corp. last week signed a deal with Trafigura for 2.5 million tons, or 27 cargoes, spread over five years, with supplies starting the middle of this year. The recent deals have been signed at a 115% link to Henry Hub plus $5 to $6 per million British thermal units. The supply is

The Federal Energy Regulatory Commission should reject a call for a 90-day pause in its deliberations over the PJM Interconnection’s rules for colocating data centers at power plants, according to PJM, major utilities and other organizations. “The national interest will be best served by a quick dismissal of this proceeding, and a ruling that the existing PJM Tariff remains just and reasonable,” PJM transmission owners said in a Wednesday filing urging FERC to dismiss a call for stakeholder settlement talks. “Rather than fighting about a wish list of new rules, the parties will then instead begin to focus on obtaining service under the rules in place today.” The transmission owners include utility companies such as American Electric Power, Dominion Energy, Duke Energy, Exelon, FirstEnergy and PPL Electric. “The record is clear — no matter how connected to the PJM transmission system, large loads pose both a safety and a reliability concern,” the utilities said. “It is unrealistic to ask the [transmission owners] to accede to these demands in the context of settlement procedures while those questions remain unresolved.” PJM also wants FERC to ignore the call for settlement discussions that was made in late April by the Electric Power Supply Association, the PJM Power Providers Group, Calpine, Cogentrix Energy Power Management, Constellation Energy Generation and LS Power Development. “The Commission should not pause its work on offering the industry guidance on a path forward for co-location arrangements,” PJM said in a Monday filing. The call for settlement talks lacks broad stakeholder support, PJM said, noting it is holding a workshop on “large load” issues on Friday. American Municipal Power, a wholesale power provider for public power utilities, and Northern Virginia Electric Cooperative and Northeastern Rural Electric Membership Corp. also oppose holding settlement talks. Beside the power generators and trade organizations,

Dive Brief: The Inflation Reduction Act – which passed in 2022 without any Republican support and is anticipated to cost taxpayers between $780 billion and $2 trillion over its first ten years – is likely to be targeted for cuts as the Republican-controlled Congress aims to cut spending by $2 trillion in order to cut taxes by $4.5 trillion. However, certain provisions of the IRA have won support with Republican lawmakers, setting up likely disagreements over cuts in the budget reconciliation process. That process is already expected to be “very contentious,” said Harry Godfrey, who leads Advanced Energy United’s federal investment and manufacturing working group. “[House Ways and Means Committee Chairman Jason Smith] and the Ways and Means Republicans will need revenue and will be seeking it, and have been saying all along that the IRA is an area they’re going to look at,” said Ryan Abraham, a principal with Ernst & Young’s Washington Council advisory practice. “But obviously there are some concerns among some members.” Dive Insight: Abraham noted the May 1 letter sent by 26 House Republicans to Chairman Smith, advocating for the preservation of the IRA’s 45U, 45Y, and 48E tax credits. The letter advocates on behalf of nuclear power specifically, “[urging Smith] to maintain federal investment in the existing nuclear energy fleet while accelerating deployment of the next generation of nuclear power technologies.” The 45U credit is the IRA’s zero-emission nuclear power production credit, while 48E and 45Y are technology-neutral credits, which were targeted in legislation introduced in April by Rep. Julie Fedorchak, R-N.D. “There’s a lot of concern that some of the bonus items that have been created in the IRA, like direct pay and transferability, which were also in that Fedorchak bill, could also get targeted,” Abraham said. However, he said, “Chairman Smith is aware

WASHINGTON — The U.S. Department of Energy (DOE) today announced three new policy actions that are projected to save more than $935 million annually for the American taxpayer, while expanding American innovation and scientific research. In three new policy memorandums, the DOE announced that it will follow best practices used by fellow grant providers and limit “indirect costs” of DOE funding to 10% for state and local governments, 15% for non-profit organizations, and 15% for for-profit companies. The Energy Department expects to generate over $935 million in annual cost savings for the American people, delivering on President Trump’s commitment to bring greater transparency and efficiency to federal government spending. Estimated savings are based on applying the new policies to 2024 fiscal year spending. “This action ensures that Department of Energy funds are supporting state, local, for-profit and non-profit initiatives that make energy more affordable and secure for Americans, not funding administrative costs,” U.S. Secretary of Energy Chris Wright said. “By aligning our policy on indirect costs with industry standards, we are increasing accountability of taxpayer dollars and ensuring the American people are getting the greatest value possible from these DOE programs.” These policy actions follow an announcement made in April to limit financial support of “indirect costs” of DOE research funding at colleges and universities to 15%, saving an estimated additional $405 million annually. By enacting indirect cost limits, the Department aligns its practices with those common for other grant providers. The full three memorandums are available below: POLICY FLASH SUBJECT: Adjusting Department of Energy Financial Assistance Policy for State and Local Governments’ Financial Assistance Awards BACKGROUND: Pursuant to 5 U.S.C. 553(a)(2), the Department of Energy (“Department”) is updating its policy with respect to Department financial assistance funding awarded to state and local governments. Through its financial assistance programs (which include grants and cooperative agreements),

If Shell Plc were to acquire BP Plc, it would be among the largest deals in European history, creating for the first time a European oil major that could challenge industry leaders Exxon Mobil Corp. and Chevron Corp. The circumstances for such a takeover might not be auspicious for BP — its shares have lost almost a third of their value in the last year and investors are unconvinced by the company’s turnaround plan — but the deal would be transformative for Shell. Since Bloomberg reported that Shell has been studying the merits of an acquisition — something both companies have so far declined to comment on — analysts have been gaming out both the upsides and downsides. Here are some of their conclusions: Oil Behemoth Combining the two London-based oil majors would create an energy giant with upstream oil and gas production of nearly 5 million barrels of oil equivalent a day, according to UBS Group. This would be an 85% increase from Shell’s current output of about 2.7 million barrels a day, making the combined company the largest investor-owned oil and gas producer. Exxon produced an average of 4.6 million barrels of oil equivalent a day in the first quarter, while Chevron pumped 3.4 million a day.  Adding BPX, the Denver-based US shale unit, to Shell’s portfolio would go some way to correct the company’s decision to sell its business in the Permian basin to ConocoPhillips in 2021, just before the industry experienced a major boom. Shell’s then-upstream director, Wael Sawan, is now chief executive officer.  LNG Dominance  Shell is already the world’s largest seller of liquefied natural gas, and acquiring BP would propel the business “to new heights,” said RBC. The combined companies’ LNG sales would jump to more than 90 million tonnes a year, representing more than 20%