Good morning, this is the Oil Patch. We're the answer to your daily oil & gas news questions.

Here's what the Oilman has for you today:

• Australia's Energy Conundrum

• Russia's Crude Oil Exports Soar

• The EU’s Natural Gas Price Cap: A Pointless Mechanism?

• Tweet of the Day

Australia's Energy Conundrum

Australia faces a conundrum as it seeks to balance energy security with export demands.

The Labor government wants to limit gas supply for exports to avoid shortages and spiking energy bills. However, this has raised concerns among energy companies and trade partners.

Japan's Mitsui warns of unintended consequences, while Credit Suisse analyst Saul Kavonic says it could undermine commitments to trade partners.

Energy companies are already spooked by the cap on domestic gas prices. The Australian government has proposed reforms to ensure sufficient natural gas supply for domestic consumers while controlling LNG exports. However, global law firm White & Case warns this could lead to legal challenges from foreign investors.

Looks like Australia needs to walk a tightrope and balance its economic and energy needs with the interests of its trade partners and energy companies.

No easy task.

Russia's Crude Oil Exports Soar

Russian crude oil exports by sea surged by 26% to 3.6 million bpd in the week ending February 17.

All export terminals on the Russian Baltic, Black Sea, Arctic, and Pacific coasts saw a rise in crude oil shipments last week.

Of those, as much as 3.19 million bpd was headed to China and India.

In January, overall Russian oil exports, including crude and products, rose to 8.2 million bpd, just ahead of the EU embargo and G7 price cap on refined products.

Crude oil exports increased by almost 300,000 bpd in January compared to December, despite a further 450,000 bpd decline in shipments to the EU.

Russia’s announced cut of 500,000 bpd in production for March could be a sign that Moscow may be struggling to place all of its barrels or “an attempt to shore up oil prices.”

Russia plans to sell more than 80% of its crude oil exports to “friendly” countries, with China and India as the biggest crude oil customers.

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The EU’s Natural Gas Price Cap: A Pointless Mechanism?

Last week, the European Union implemented a cap on natural gas prices in the hope of avoiding a repeat of last year's sky-high prices.

The EU’s initial proposal was for a cap of 275 euro per MWh, or $287, but this was rejected. The cap was revised and approved at 180 euro per MWh.

However, the current price of natural gas on the EU spot market is around 50 euro per MWh, which makes the likelihood of triggering the cap mechanism remote.

Is it worth the trouble?

The EU's decision to implement a price cap was not unanimous.

Some richer EU members, such as Germany and the Netherlands, opposed the idea of capping the price of a commodity that sells on a free, unregulated market. On the other hand, countries such as Spain, Italy, and Eastern European states defended the cap as a means of keeping gas affordable.

The cap was eventually set at 180 euro per MWh, but there were concerns that it could destabilize the EU financial system. Traders and ICE expressed concerns that the cap could cause them to move out of the EU.

The cap mechanism remains largely pointless

Natural gas is trading at around 50 euro per MWh on the EU spot market.

While natural gas in storage is at much higher levels than usual at this time of the year, European buyers will not need to worry about refill season too soon.

However, with a late cold snap, storage sites could empty, and gas prices could approach the cap. Yet, the likelihood of triggering the cap mechanism is low, and it's not clear how many sellers will be willing to abide by the EU cap.

The EU is also stuck with gas it bought at higher prices, and at some point, buyers will have to begin buying again for next winter, and prices will jump.

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