Author Topic: Future strategy to survive discovering 1 out of every 20 bbls of oil we now use.  (Read 253706 times)

SharperDingaan

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Very clever move by the Iranians
"Iran will offer oil futures to interested foreign parties at pre-determined rates. According to OPEC’s most recent Monthly Oil Market Report, however, Iran’s average crude oil production in May was 2.37 million bpd according to secondary sources."
https://oilprice.com/Latest-Energy-News/World-News/Iran-To-Offer-Oil-Future-Contracts-To-Foreign-Firms-Despite-Sanctions.html

Buy physical Iranian crude at a discount; today, AND UP TO 3 YEARS FROM TODAY.
Ship-to-ship transfer of Iranian for Iraqi crude at sea. The Iranian loader continuing to the monitored port, the Iraqi loader to a mystery port. The Iranian loader gets seized .. but unfortunately the lab confirms it's not Iranian crude. Reminds one of the 'good ol' days' of Ari Onassis!
https://gcaptain.com/seized-supertanker-grace-1-at-full-capacity-with-crude-gibraltar-says/
https://en.wikipedia.org/wiki/Aristotle_Onassis

And even if you were caught ... were you carrying Iranian crude (under sanction), or Iranian condensate (not sanctioned)?
Iranian oil smugglers are very good at what they do, and have been doing it for a very long time. Whereas the Americans ... not so much. "At various points, Darroch called Trump “clumsy and inept,” described him as “radiating insecurity,” and referred to the administration’s Iran policy as “incoherent” and “chaotic”
https://theiranproject.com/blog/2019/06/27/expansion-of-irans-persian-gulf-star-refinery-on-track/
https://foreignpolicy.com/2012/04/16/the-oil-smugglers-of-tehran/
https://www.vox.com/2019/7/10/20688703/kim-darroch-uk-ambassador-resigns-trump-boris-johnson

American weaponry is not useful unless it is used, and Iranian smuggling is 'winning'. Iran exports are not at zero (or even close to).
To stop the smuggling, the Americans have little choice but to knock out the loading facilities; easy enough to do, but there will be retailiation. And very likely ... an extended conflict.

Hard to see how WTI doesn't go to USD 70+ once the conflict starts.
And harder to see how it can be avoided.

SD




SharperDingaan

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Shitty way to make a buck, but it would appear that WTI is highly likely to continue rising > USD 60 for quite some time. It would seem that Trump can’t back-off, the US Congress can’t stop him from pulling the US into a war (repeated attempts), and the clock is rapidly ticking down. There is no “day after” plan, as the plan is removal of the mullahs – with air/naval strikes only, and no body bags.  Alternatively, removal of Trump himself, by impeachment.

Numerous European leaders this weekend, expressing concern that armed conflict is very close. Kuwait announcement they are militarily moving to protect key OPEC exporter ports. Rouhani clearly outclassing the US in just about everything it does. And all this concurrent with big weekly draws on crude inventories.
https://www.reuters.com/article/us-mideast-iran-kuwait/kuwait-moves-to-protect-its-ports-amid-gulf-tensions-idUSKCN1U80NK
https://www.reuters.com/article/us-iran-nuclear-usa/rouhani-says-iran-ready-to-talks-to-u-s-if-sanctions-lifted-tv-idUSKCN1U90DQ

We live in interesting times
SD


“the former United Kingdom ambassador to the United States, said the Trump administration was "set upon an act of diplomatic vandalism" in its decision to abandon the Iran nuclear deal. Trump seemed to be discarding the Iran nuclear deal for "personality reasons," as the deal had been agreed to by former President Barack Obama. Hints that the White House has no "day-after" plan on how to handle the aftermath of withdrawing from the deal.
https://www.cnn.com/2019/07/13/politics/daily-mail-trump-iran-nuclear-deal-leaked-cables/index.html

Lawmakers adopted the amendment in a 251-170 vote with more than two dozen Republicans in support. The House and the Senate will still have to reconcile their separate versions of the defense bill, and are likely to exclude the Iran amendment from the final package. Last month, a similar measure that would have restricted the president's ability to unilaterally launch military action on Iran failed in the Senate. The legislation received 50 votes in favor and 40 against, falling short of the 60-vote hurdle to advance to a final vote.
https://www.nbcnews.com/politics/congress/house-votes-require-congressional-approval-military-strike-against-iran-n1029311


SharperDingaan

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The ME is where an ‘eye-for-an-eye’ was invented, and goes back to Hammurabi’s Code and the Babylonian Empire; start a conflict, and there will be no winners. Expecting the Iranians to ‘back down’ in the face of threats, just reflects how poorly the US understands what it has got into.

A senior politician and Revolutionary Guards commander, Major General Mohsen Rezai, said on Twitter that Iran was also not looking for war, “but we are not going to come up short in reciprocating.” http://www.ushistory.org/civ/4c.asp

Notable is that Iran needs (short-term) higher crude prices (to discount from), and the US/SA/etc. needs lower ones (long-term) to prevent demand collapse and a resurgence of US shale production. WTI at maybe USD 55-60 for the US, USD 65-75 for the Iranians? To make up for revenue shortfalls the US/SA/etc. have to sell more volume at lower prices; additional volume that must come out of Iran’s OPEC production quota if prices are not to collapse. The US imposes global sanctions on Iran, and delivers additional production quota?

Take out my oil facilities, and I will take yours.
Iranian and OPEC supply instantly drops like a brick, at the same time that demand spikes (buying for inventory buffers); WTI spikes.
US/China trade war to reduce base demand? Inflated US and EIA inventory reserves on stand-by to mitigate?
Suggests that strikes are expected to happen.

Iraq used to have Hussein, Iran used to have Khomeini? SA used to have King Abdullah/MBS?
 “By law, all Saudi citizens must be Muslims. It is illegal for Saudis to follow a different religion. If Saudi Arabia did not control so much oil, King Abdullah and the Saudi royal family would be treated just as much as pariahs as are Than Shwe and the Burmese generals.”
https://www.huffpost.com/entry/the-worlds-worst-dictator_b_28679

Hard to see how this ends well.

SD
« Last Edit: July 24, 2019, 10:18:08 AM by SharperDingaan »

Cardboard

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sculpin

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https://oilprice.com/Energy/Crude-Oil/Will-We-Really-See-An-Oil-Glut-In-2020.html

The IEA chronic underestimation of global oil demand combined with the market erroneous belief in the unshakable resilience of US supply growth, is painting an overly bearish picture of the global oil demand-balance in 2020. As I have argued in the past (The New Oil Order) US shale has introduced a new dynamic oil market balancing force that official agencies (such as the IEA) are still struggling to properly account for in their projections. Historically, the IEA has struggled with capturing the exact level of global oil demand, understandably so, considering the vast scope of the oil market. Supply, on the other hand, was easier to project due to the concentrated nature of oil production in few OPEC countries and a handful of non-OPEC mega projects, but with the advent of shale, projecting global oil supply has become a challenging task as well. Consequently, when agencies such as the IEA are unable to properly track global demand and are unable to account for fast changes in US shale supply, one has to take their 2020 oil glut predictions with a grain of salt.

sculpin

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Energy Stat: Oil Price Gains Set to Continue, as Supply-Side Factors Outweigh Question Marks Over Demand
J. MARSHALL ADKINS  (713) 789-3551 | PAVEL MOLCHANOV  (713) 278-5270

As fun as it is to track White House oil-related tweets and the Royal Navy's Persian Gulf adventures, what ultimately matters for oil prices is (drumroll please)... actual supply/demand fundamentals. As we reiterate today, our global oil supply/demand model remains broadly upbeat, driven largely by bullish supply-side factors. After taking into account the recent extension of the OPEC+Russia production cuts as well as our latest U.S. rig count forecast, we expect global petroleum inventories to draw by 1.0 million bpd in 2019 and 300,000 bpd in 2020, with inventories (on a days-of-consumption basis) set to fall to unprecedentedly low levels in 2020.

After marking-to-market near-term oil prices, including the recent price volatility amid macro-related concerns about global demand, our 2019 WTI forecast decreases from $65.50/Bbl to $62.50/Bbl, and similarly Brent from $74 to $71. More importantly, we continue to believe that 2020 will be a cyclical-peak year, due to the impact of IMO 2020, and thus we maintain our forecast of $92.50 WTI and $100 Brent - which is at the high end of Street expectations and well above the current futures strip.

July 19, 2019

sculpin

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Re: Future strategy to survive discovering 1 out of every 20 bbls of oil we now use.
« Reply #1097 on: September 11, 2019, 08:32:34 PM »

HFI Research

@HFI_Research

Since June 1 global oil inventories including oil on water declined by 120 million bbls.

~1.2 mb/d deficit

Cardboard

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Re: Future strategy to survive discovering 1 out of every 20 bbls of oil we now use.
« Reply #1098 on: September 14, 2019, 06:05:55 AM »
Drone attacks strike major Saudi Aramco facility, oilfield
https://www.cnbc.com/2019/09/14/explosion-fire-hit-major-saudi-aramco-facility.html

Damage or production delays unknown yet. 6-7% of worldwide production.

sculpin

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Re: Future strategy to survive discovering 1 out of every 20 bbls of oil we now use.
« Reply #1099 on: September 14, 2019, 09:16:13 AM »
Drone attacks strike major Saudi Aramco facility, oilfield
https://www.cnbc.com/2019/09/14/explosion-fire-hit-major-saudi-aramco-facility.html

Damage or production delays unknown yet. 6-7% of worldwide production.

The great Russian author, Nabokov, once said: “ Complacency is a state of mind that exists only in retrospective: it has to be shattered before being ascertained.”