Quote of the Week

“What oil companies and car companies are saying [about future sales of plug-in vehicles] is diverging.  This is a trillion-dollar question, and someone is going to be wrong.”

Colin McKerracher, head of advanced transport analysis for Bloomberg New Energy Finance

Graphic of the Week


1.  Oil and the Global Economy
2.  The Middle East & North Africa
3.  China
4.  Russia
5.  Nigeria
6.  Venezuela
7.  The Briefs

1.  Oil and the Global Economy

Oil prices climbed steadily last week, ending up Friday about $5 a barrel higher in New York at $46.54 with London the usual $2.50 or so higher. Although market concerns about oversupply have not gone away, a 7.6-million-barrel decline in US crude stocks and better demand from Europe and China was enough to keep the markets climbing higher. Rising prices were kept in check, however, by the continuing increases in oil production in the US, Canada, Libya and Nigeria. There are also concerns that adherence to the OPEC production cut is slipping and many traders are losing confidence in OPEC’s ability to balance the markets with the current level of effort.

Concerns are increasing as to how much longer Wall Street will continue funding the US shale oil rebound with prices still in the $40s and many drillers losing money. US drilling costs now are rising as more drilling rigs return to production. Drilling costs had declined by 34 percent between March 2014 and November 2016 as the demand for drilling services tanked.  This decline helped sparked the financial press mantra that shale oil break-even points were now down in the range where drillers could again make money despite the substantial drop in the selling price of crude. Now the situation is reversing with drilling costs in June up by 8 percent compared with last December.

US oil production has increased by nearly 500,000 b/d since the end of 2016 to 9.3 million b/d. Most of this increase has been shale oil, although there has been a slow and steady rise in off shore production. This increase in projected by many to continue to a record 10 million b/d by next year unless prices fall further.  During the last 18 months, Wall Street is believed to have invested an estimated $57 billion in the oil sector, despite the dubious profitability of many oil companies which are losing money on every barrel produced.  Some point out that loose money and credit are contributing to the lower prices and that this situation cannot last much longer. Despite some gains in efficiencies, the industry is expected to be $20 billion cash flow negative this year.

The OPEC Production Cut: The top oil-related issue in the financial press these days is the production cut and the question of whether it will rebalance the oil markets anytime soon.  Since the cut began in January increased production from Canada, the US, Nigeria, and Libya have largely offset the 1.8 million b/d reduction in production that is supposed to be taking place.

Despite assurances that the OPEC and non-OPEC adherents to the cut were keeping up their part of the agreement, doubts are starting to grow as to whether some of the oil producers have found ways around the cut. Several countries surged their production above normal so that could start cutting from an abnormally high base. Others have increased exports in the last six months by drawing on reserves. A few others such as Iraq and Iran may simply be cheating on their production figures.

When it became obvious that the OPEC production cut was unlikely to reach its goal of rebalancing the markets, the adherents agreed to extend the agreement to next March from the original six months, although it was discussed at the time the oil producers were unwilling to make the larger cuts that many feel necessary to offset the increasing US production.  Without deeper cuts, most observers believe the cut will not achieve its objective.

Currently, OPEC is considering imposing production caps for Libya and Nigeria that were exempted from the original cut as internal problems had brought their production well below productive capacity. With production rebounding rapidly in both countries, it seems obvious that the two should accept some limit. So far, this discussion has had little impact on prices as most observers do not believe the two would be willing to cut production from current levels. Libya has a current short-term production goal of 1.25 million b/d and Nigeria has a goal of 2 million. If a production cap is set at this level, the two countries could raise production by another 500,000+ p/d which would completely wipe out any impact the production cap might have.

Peak Oil:  The original meaning of the term “peak oil” was a point in time when the global supply of “cheap” or “affordable” oil would start to run dry and global oil production would start shrinking. The discovery of “fracked shale oil” and the growth of the shale oil industry put the term into disrepute as most jumped to the conclusion that shale oil was nearly an inexhaustible resource and that any future oil shortages would be in somebody else’s lifetime. While shale oil production in the US boomed, lost in all the enthusiasm was the fact that around the world conventional oil continued its slow, methodical production decline due to normal depletion.

The sharp decline in oil prices in the last few years which came largely from the overproduction of shale oil, and the subsequent drop in capital expenditures for finding and developing new oil sources, outside of US shale oil, has changed the picture completely. With little new oil being found and the depletion of existing wells slowly (or in some cases rapidly) eating into existing oil production, some are starting to worry that the world is headed for an oil supply shortage in the 2020s.

Last week, the CEO of Saudi Aramco said “Financial investors are shying away from making much needed large investments in oil exploration, long-term development and the related infrastructure. Investments in smaller increments such as shale oil will just not cut it.” He added that about $1 trillion in investments have already been lost since the decline in oil prices began in 2014. Studies show that 20 million b/d of new production will be needed to meet demand growth and offset natural decline of developed fields over the next five years, he said.

“If this situation continues over the next few of the years, consumers at the end of the supply line will be impacted.”

Another kind of peak oil coming in for much discussion is “peak demand” which eventually will cause oil production to decline due to lack of customers. This phenomenon might be coming from regulations and policies to combat global warming or maybe from the advent of electric vehicles that will markedly lower the demand for gasoline and diesel as fuels.  Few in the financial press are willing to delve into the impact of global warming on the demand for oil, but increasing attention to better electric vehicles is raising concerns in the oil industry.

While oil and auto industry estimates hold that electric vehicles will not occupy more than a small niche in the automobile fleet within the next 25 years, some countries such as France are talking about banning the sale of internal combustion engines starting in 2040. It is starting to seem that peak global oil production may come one way or another.

The CEO of Shell told the St. Petersburg energy conference in June that in an aggressive scenario you can see the demand for oil peaking in the late 2020s or early 2030s. Given that multibillion-dollar offshore projects often take ten years to plan and complete, the energy industry has some serious thinking to do. Many oil assets considered valuable today might never be tapped as oil prices can be expected to stay low as demand softens.

Some of this depends on how fast the effects of climate change begin to impact individual economies in a way that can’t be ignored or denied. China is already enduring devastating floods and high temperatures over much of the country. If this should continue, peak demand could come sooner than expected.

2.  The Middle East & North Africa

Iran: Optimistic as ever, Tehran says it will raise its oil production from 3.8 million b/d to 4 million by the end of the year. Iran’s deputy oil minister also said that his country’s natural gas production will increase from 800 cubic meters per day to 1 billion next January. The minister expects export volumes of natural gas to reach 365 million cubic meters a day in 2021 which would make Iran the largest exporter of LNG in the world.

At the recent world energy conference in Istanbul, Iranian officials said the announcement that Total will invest $1 billion in an Iranian natural gas project was only the beginning. The officials say they expect to sign some ten contracts just like the one with Total in the next year or so and are expecting $92 billion in foreign investments in the next year which will increase oil production by a third and natural gas exports by 15-fold by 2021.

Other than Total, which had been doing business in Iran before the sanctions, many major western oil companies are wary of doing business with Iran. They cite the remaining US sanctions on Iran and the low oil prices which make it difficult to accumulate capital for new investments as the reasons for a lack of interest.  There are safer places than Iran to invest money in oil production these days.

For the second time since January, the Trump administration is planning to certify that Iran is in compliance with the nuclear agreement. This comes despite President Trump calling the deal disastrous and White House staffers arguing that the US should renounce the deal in retaliation for Iran’s support of Assad and its ballistic missile tests.  The US secretaries of state and defense, however, are in favor of keeping the treaty in place. Given the various confrontations that the Trump administration is already involved with over trade, climate change, North Korea, Qatar and others, the last thing the US needs at this point is to open a fight over the Iranian atomic weapons program.

Iraq: There was not much news from Iraq last week. The Norwegian energy company DNO said its operations in Iraqi Kurdistan are going well and that the Kurdish government has been paying the bills for the oil that DNO produces.

Baghdad has invited foreign oil companies to propose contracts, but not production sharing agreements, for eight oil fields along the borders with Iran and Kuwait. Like some of it neighbors, Iraq fears that oil fields that cross national borders will be drained by its neighbors before Iraq can get its fair share to the surface.

In a major story, The New York Times notes that Iraq is rapidly becoming a wholly-owned subsidiary of Iran and that Tehran now dominates many aspects of Iraqi politics and economy. After the brutal eight-year war that Iran had to fight with Iraq 35 years ago, Tehran wants to make sure that Iraq never again becomes a threat. In the meantime, Iraq becomes a staging area for Iranian support for Shiite causes in Lebanon and Syria.

Saudi Arabia/Qatar: Riyadh is planning to curb oil shipments to the US in a bid to cut the amount of oil in US commercial storage. Some note, however, that as the US is now exporting circa 1 million barrels of oil each day, falling US commercial storage of crude is the result of oil being moved elsewhere and not any marked increases in US oil consumption. At any rate, US imports from the Saudis will fall to less than 800,000 b/d in August. The Saudis need these extra barrels to keep the air conditioning on during the summer at a time when they are supposed to be keeping their oil production under 10.058 million b/d.

News sources report that production from the Saudis 900,000 b/d Manifa oil field is suffering from technical problems. It seems that the field’s water injection system that maintains field pressure is corroding and needs major maintenance.  The Saudis never talk about the details of their oil production, but if the entire field needs to be shut down for an extended period, it could take quite a hit out of Saudi oil exports in coming months.

The UK’s Financial Conduct Authority is making easier for the Saudis to list their Aramco shares on the London stock exchange as opposed to New York. With Brexit coming, the British are anxious to retain all the financial business they can. The British plan to establish a new stock listing category with different rules that could exempt the company from releasing much of the detailed information that listing in New York would require.

Saudi Aramco received government permission to establish two new companies that will develop a new Energy Development City in Saudi Arabia. The city is part of the Saudi plan to expand its industrial base.

The dispute with Qatar appears likely to continue indefinitely. Secretary Tillerson spent four days in the region last week attempting to negotiate a settlement with no results. The Qataris have rejected the various demands that impact their sovereignty and note that they have $340 billion in foreign reserves. With the help of Iran and Turkey, Qatar should be able to withstand a boycott. As an example, last week the Qataris began flying 5,000 milk cows into the country to ensure that its children have fresh milk. A lot can be done by a small country with $340 billion.

The Saudis however, are vowing to take new measures against Qatar so the situation remains dangerous. With a major US military installation in the country, the Saudis and their allies are unlikely to undertake any deliberate military moves against the much smaller country, but there is always the danger of miscalculation as we saw in Yemen. In the meantime, Total says it soon will start work on expanding Qatar’s biggest oilfield.

Libya: Kuwait’s OPEC delegate said that it is too soon to cap Libyan and Nigerian OPEC production which only recovered last month. The political situation in both countries is still precarious. The current question is how long can Libya sustain production near or above 1 million b/d before some political upheaval starts closing it down. If recent history is a guide, this is unlikely to be more than a few weeks.

The situation remains unstable with remnants of the recently-defeated ISIS forces and the Benghazi militias fleeing into the southern deserts to regroup and continue the struggle. The UN-sponsored Tripoli government controls much of West Libya while General Haftar’s Libyan National Army controls much of eastern Libya including Benghazi. Neither has the strength to deal with all the militias, bandits, and extremist groups in the southern deserts, but the two governments seem to have the oil production functioning again. General Haftar may move to extend control over Sirte but does not have the strength to take on the Tripoli based Government of National Accord that is backed by the UN and most Western powers.

Washington is considering reopening the embassy in Tripoli and sending a small military force to show the flag. Italy continues to pressure the US to help stem the flow of African refugees.

3.  China

Southern China has been deluged with heavy rains this month causing severe flooding, while northern China is being baked by a heat wave. Millions of people have been forced to relocate by the floods, and some 2 million acres of crops have been damaged. Many new flood-height records have been set. The Three Gorges and Gezhouba dams, two of China’s largest hydro power plants, were forced to shut down two-thirds of their capacity to keep the flooded downstream river from getting worse. On Saturday, a typhoon slammed into southern China causing still more havoc.

Last week, China announced that it had imported 8.79 million b/d of crude in June making it the world’s top buyer of crude for the month. This was 17.9 percent more oil than imported in June of 2016. China’s increasing demand for imported oil is largely due to the closure of many older Chinese wells which were costing far more to operate than imported oil costs at today’s prices. Declining coal production and reduced hydro power output due to flooding are also increasing the need for imported crude.

Beijing announced that it had completed a 60-day trial of mining for frozen gas hydrates in the South China Sea. According to the Chinese, the trial produced over 300,000 cubic meters of methane at an average rate of 5,000 cubic meters per day. China’s press release claims the technology will have a big impact on the world’s energy sector once it gets into commercial production. Japan has also been experimenting with extracting methane from hydrates in the South China Sea. However, industry consensus is that commercial scale production is still years away.

4. Russia

In recent weeks, Moscow has been waffling on the issue of whether it would participate in a larger OPEC production cut. Last week, and just one day after Russia’s energy minister said the current cuts were working and no further cuts were needed, Moscow changed its position. On Friday, a Russia energy official said that Moscow is ready to review new proposals including changes to production cuts.

A Japanese group’s plans to explore for oil in Russia have been thwarted by US sanctions policies. This shows that the US Treasury remains firm on its sanctions policies despite pressure from international oil companies who want to do business in Russia. In April, even Exxon Mobil was turned down when it requested a waiver to drill in the Black Sea. Foreign companies fear they will be blackballed by the US if they violate Washington’s sanctions policies.

5. Nigeria

On Thursday, Shell’s announced a force majeure on Bonny Light crude exports just two weeks after it had lifted a previous force majeure on exports of Bonny Light. According to Shell, the declaration came after Nembe Creek Trunk Line – one of two that export the Bonny Light grade — was shutdown. As usual, government policy forbids oil companies from discussing the reason for any oil production outages to keep from encouraging militants who conduct frequent attacks.

According to Reuters data, loadings of Bonny Light in August were supposed to be 226,000 b/d. As of June 22nd,Nigeria was planning to export more than 2 million b/d in August for the first time in 22 months.  Production in June was 1.73 million. Last week Nigeria’s Oil Minister said he was willing to support OPEC and cap output at 1.8 million b/d. Now we will have to wait and see just what this production outage is all about.

The US Justice Department has filed a civil complaint seeking to recover some $144 million in bribes paid to former Nigerian Oil Minister Diezani Alison-Madueke. The minister received the bribes for steering oil contracts to the bribe payers. The money was then laundered into Manhattan property and an $80 million yacht which is why the US is involved in the matter.

6. Venezuela

The situation continues to deteriorate. Venezuela’s foreign reserves have dropped below $10 billion for the first time in 15 years. In 2015, it had $20 billion, and in 2011 it had $30 billion. The reserves peaked at $43 billion in 2009. A new analysis shows that Venezuela’s oil production has declined in ten of the las 11 years and is now down to the lowest since 1989 – except for the 2002 oil strike. In the first half of this year, production was down 12 percent from the first half of 2016. Domestic fuel shortages are increasing as refineries are only operating at 40 percent of capacity forcing the government to import motor fuel. Service providers such as Halliburton and Baker-Hughes have cut down on production until the government pays them for millions of dollars of unpaid bills. The country still owes about $5 billion in debt payments this year, and on Tuesday S&P downgraded the country deeper into junk status.

The company is still paying back China and Russia by shipping them oil for which it receives no payment.

Street demonstrations, in which more than 100 have died in the last few months, continue. The opposition held an illegal plebiscite over the weekend to determine if the people will vote for a new government proposal that would essentially turn the government into a dictatorship. A recent survey reports that the average poor Venezuelan lost 19 pounds last year due to insufficient food. A tube of toothpaste costs half a week’s wages and is rationed.

This situation is not going to last much longer.

7.  The Briefs

The world’s biggest oil producers are starting to take electric vehicles seriously as a long-term threat.  OPEC quintupled its forecast for sales of plug-in EVs, and oil producers from Exxon Mobil Corp. to BP also revised up their outlooks in the past year, according to a study by Bloomberg New Energy Finance released on Friday. The London-based researcher expects those cars to reduce oil demand 8 million barrels by 2040, more than the current combined production of Iran and Iraq. (7/15)

Global investments in oil and gas fields are likely to rebound modestly this year thanks to a sharp uptick in spending by US shale producers, the IEA said in a report Tuesday. The 3% increase in fossil-fuel development foreseen by the IEA in 2017 represents a positive note for an industry that went through the longest period of retrenchment on spending in half a century after the oil-price crash of 2014. (7/11)

Labor intensity: Technological advances have led to declines in labor tied to oil and gas with only small impacts on production, the IEA wrote in a report studying overall capital spending in an era where crude oil prices have lingered at historic lows. (7/12)

Shell said it’s past the halfway point in its three-year $30 billion divestment streak after shedding its stake in a natural gas field off the coast of Ireland. The stake in Ireland was a $1.23 billion asset. (7/13)

Turkey warned Greek Cypriots on Friday not to make a grab for energy reserves around the divided island and President Erdogan told oil companies to be careful they did not lose a “friend” by joining in. Talks to reunite the ethnic Greek and Turkish sides of Cyprus collapsed in anger and recrimination in the early hours of Friday. (7/11)

Kazakhstan’s Energy Minister said at an industry conference in Istanbul over the weekend that Kazakhstan’s withdrawal from its pledge last November to help the OPEC/non-OPEC oil production cap will take place gradually.  The nation’s oil production actually rose by 40,000 b/d in February to 1,718 million b/d, according to the latest data from the IEA.  Much of Kazakhstan’s increase is coming from the Kashagan field, which is up to 170,000 b/d since production started five months ago. (7/12)

Abu Dhabi’s national oil company, ADNOC, has gotten the Saudi fever it seems. After restructuring part of its ongoing upstream business, most notably, the merger of some of its Operating JVs (OPCOs), the company now seems to have set its eyes on privatizing part of its downstream assets, with its main target being an increase in overall revenue streams and greater access to more markets. (7/12)

Indian Oil Corp. will take delivery of more than a million barrels of US heavy crude in October—the first US crude oil purchase by an Indian energy company. The deal includes 1.6 million barrels of Mars crude plus 400,000 barrels of Western Canadian Select, to be shipped to by PetroChina. The price was “very competitive” to Iraq’s Basra Light, and if it stays that way, more US oil will ship to India. (7/11)

Singapore and Malaysia: The biggest oil traders feeling the squeeze in a world awash with crude are seeking an edge by offering tailor-made cargoes in an offshore megastore. By selling bespoke from a fleet of ships anchored off Singapore and Malaysia, the likes of Vitol Group, Trafigura Group, Glencore Plc and Gunvor Group are seeking to lure buyers who are becoming more demanding.  (7/12)

Australia is getting diesel shipped from the US, in an unusual shipping flow. Australia imports most of its diesel requirements from Singapore, South Korea and Japan but several refineries undergoing maintenance and prompt demand from India has tightened the supply of the fuel in Asia, traders said. (7/13)

Offshore Senegal, oil was discovered yet again, which the companies involved said Tuesday would be added to the reserve potential in the emerging basin. Scottish energy company Cairn leads a consortium probing the reserves in waters off the coast of West Africa. According to FAR Ltd., the company’s drilling partner, FAN South-1 could hold as much as 134 million barrels of oil. (7/12)

Venezuela’s crude and fuel deliveries to Cuba have slid almost 13 percent in the first half this year, threatening to worsen gasoline and power shortages in the communist-run island. Cuba’s government since 2016 has reduced fuel allocations 28 percent to most state-run companies, and has cut electricity consumption. Public lighting was cut 50 percent. (7/14)

Offshore Suriname, Norwegian energy company Statoil said Friday it extended its reach beyond Norway to acquire stakes in what could be one of South America’s biggest prizes. Statoil took a 33.3 percent interest in so-called Block 59 off the coast of Suriname in a consortium that includes US counterparts Exxon Mobil and Hess Corp. (7/15)

In Chile, record low renewable energy prices are here to stay and will likely push power prices even lower, Chile’s energy minister told Reuters, a development that would pressure the nation’s already squeezed diesel and natural gas industries. (7/15)

Offshore Mexico, Talos Energy, working alongside joint venture partners Sierra Oil and Gas and Premier Oil, said it confirmed a discovery at the Zama-1 exploration well. Initial estimates put the reserve potential at between 1.4 billion and 2 billion barrels of oil, which exceeded early expectations. (7/13)

Mexico’s recent billion-barrel crude discovery could be just the lure the country needs to boost investment from oil majors as it lacks the wherewithal to reverse years of sagging output. (7/13)

The Mexican government on Wednesday awarded 21 oil and gas blocks across the country in two auctions which put private-sector interest in developing gas in Mexico to the test. In the first auction of mostly gas fields, exploration and production licenses were awarded for seven out of 10 areas, nine of them in the Burgos basin of northeastern Mexico. (7/13)

Mexico is planning to hold four more oil and gas block tenders by November 2018 as part of efforts to ensure the sustainability of its energy industry and make better use of its hydrocarbon reserves. In addition to the three auctions already announced, there will be the fourth one, offering a mix of shallow and deepwater blocks, as well as shale gas deposits. (7/10)

The US is on track to have the capacity to become the world’s second largest exporter of liquefied natural gas (LNG) by the end of 2022, just behind Australia and ahead of Qatar, the IEA said. Overall, global LNG export capacity would reach 650 billion cubic meters (bcm) a year by the end of 2022, compared to less than 452 bcm a year in 2016. (7/13)

The US oil rig count increased by two last week, while the gas rig count declined by two, leaving the total US rig count flat at 952 rigs, according to Baker Hughes Inc. (7/13)

The American Petroleum Institute reported a 62-percent annual increase in oil and gas drilling in the US during the second quarter of 2017. For oil, well completions shot up by 81 percent in April-June 2017 from a year earlier, according to API estimates, and rose by 19 percent from the first quarter of the year. Gas well completions were estimated to be 41 percent higher in the second quarter of 2017 than in the same period a year earlier. (7/14)

Total US oil output is expected to reach 9.9 million barrels per day next year, the highest level ever if forecasts are accurate. The US Energy Information Administration estimates about 20 percent of total US oil production comes from the Gulf of Mexico. (7/14)

Offshore Alaska, Eni USA will become the first energy company allowed to explore for oil in federal waters since 2015 after the Trump administration this week approved a drilling plan on leases the company has been sitting on for ten years. (7/14)

Oklahoma quakes: The US Geological Survey says several earthquakes have struck north-central Oklahoma, including one with a preliminary magnitude of 4.2 and five others between 2.7 and 3.8. Scientists have linked some oil and gas production in Oklahoma to an uptick in earthquakes, but the frequency of such earthquakes in Oklahoma had dropped recently as the state imposes new restrictions on the injection of wastewater underground. (7/15)

Coal is projected to provide the largest share of US power generation in 2017, retaking the crown from natural gas, according to the US EIA. The agency projects coal will fuel 31.3% of the US’ electricity in 2017 compared with 31.1% for gas. In 2016, gas surpassed coal as the nation’s primary fuel for the first time, totaling 33.8% of generation compared with 30.4% for coal. (7/12)

US nuclear power experts have proposed taking the disposal and storage of nuclear wastes out of the hands of the Federal government and placing it with a new corporate entity. (7/13)

Battery breakthrough? Researchers at Tokyo Institute of Technology have devised a low-cost, scalable approach to developing all-solid-state batteries, improving prospects for scaling up the technology for widespread use in electric vehicles, communications and other industrial applications. Described in a paper in the ACS journal Chemistry of Materials, the approach involves substituting germanium in the solid electrolyte for two more readily available elements: tin and silicon. (7/15)

EV study: In a new study, a team from the University of Central Florida and MIT has found that the US Corporate Average Fuel Economy (CAFE) Standards is an effective policy solution that does increase the adoption of EVs, whether it is implemented alone or in conjunction with another policy such as government incentives. (7/11)

Electric planes!? Israeli startup Eviation plans to build an all-electric short-haul 9-passenger airliner capable of flights up to 600 miles and have it flying by 2020. (7/11)

US offshore wind: After two decades spinning power from the gusts that sweep Europe’s North Sea, the offshore wind industry is finally turning to the US. A big hurdle: getting its giant turbines to American waters. No one in the US currently makes turbine towers high enough for use in deep waters—one of the many challenges impeding the buildup of offshore wind on the other side of the Atlantic Ocean. (7/10)

Algeria is ahead of the curve when it comes to renewable energy potential in Africa, and General Electric aims to ride that momentum. GE sponsored a conference on renewable energy in the African sector, highlighting Algeria’s lead in wind and solar power developments. By 2030, the government aims to install about 22,000 megawatts of renewable power. (7/11)

Fusion’s latest delay: We will have to wait until the second half of the century for fusion reactors to start generating electricity, according to the latest version of a European “road map” drawn up by scientists and engineers at EUROfusion. (7/12)

Climate change, if left unchecked, could lead to the loss of about $52 billion per year for the economies of the Asia-Pacific, the Asian Development Bank said. A report from the bank found a business-as-usual scenario would lead to an increase in rainfall by as much as 50 percent. (7/15)

Climate switchback? In France, President Emmanuel Macron said he “respected” Donald Trump’s decision to pull out of the Paris climate accord but that France would remain committed. Mr. Trump then hinted that the US could shift its position but failed to elaborate. The US president withdrew from the 2015 Paris climate agreement last month, citing moves to negotiate a new “fair” deal that would not disadvantage US businesses. (7/13)