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Oil glut fallacy

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Since mid 2014 US MSM propagate the following bogus narrative: There is an oil glut in the USA market in particular despite the fact that the USA increasing their import of oil. To cry about glut on oil in the country which imports  more and more oil is something new to me.  That can happen only if some produced oil is subpar and nobody wants it (comment from blog post World oil supply and demand Econbrowser)

The Great Condensate Con?

We have seen a large year over year increase in US and global Crude + Condensate (C+C) inventories. For example, EIA data show that US C+C inventories increased by 100 million barrels from late 2014 to late 2015, and this inventory build has contributed significantly to the sharp decline in oil prices.

The question is, what percentage of the increase in US and global C+C inventories consists of condensate?

Four week running average data showed the US net crude oil imports for the last four weeks of December increased from 6.9 million bpd in 2014 to 7.3 million bpd in 2015. Why would US refiners continue to import large–and increasing–volumes of actual crude oil, if they didn’t have to, even as we saw a huge build in US C+C inventories? Note that what the EIA calls “Crude oil” is actually C+C.

I frequently cite a Reuters article that discussed case histories of refiners increasingly rejecting blends of heavy crude and condensate that technically meet the upper limit for WTI crude (42 API gravity), but that are deficient in distillates. Of course, what the refiners are rejecting is the condensate component, i.e., they are in effect saying that “We don’t want any more stinkin’ condensate.” Following is an excerpt from the article:

U.S. refiners turn to tanker trucks to avoid ‘dumbbell’ crudes (March, 2015)

http://www.reuters.com/article/2015/03/23/us-usa-refiners-trucks-analysis-idUSKBN0MJ09520150323

In a pressing quest to secure the best possible crude, U.S. refiners are increasingly going straight to the source.

Firms such as Marathon Petroleum Corp and Delek U.S. Holdings are buying up tanker trucks and extending local pipeline networks in order to get more oil directly from the wellhead, seeking to cut back on blended crude cocktails they say can leave a foul aftertaste. . . .

Many executives say that the crude oil blends being created in Cushing are often substandard approximations of West Texas Intermediate (WTI), the longstanding U.S. benchmark familiar to, and favored by, many refiners in the region.

Typical light-sweet WTI crude has an API gravity of about 38 to 40. Condensate, or super-light crude that is abundant in most U.S. shale patches, ranges from 45 to 60 or higher. Western Canadian Select, itself a blend, is about 20.

While the blends of these crudes may technically meet the API gravity ceiling of 42 at Cushing, industry players say the mixes can be inconsistent in makeup and generate less income because the most desirable stuff is often missing.

The blends tend to produce a higher proportion of fuel at two ends of the spectrum: light ends like gasoline, demand for which has dimmed in recent years, and lower-value heavy products like fuel oil and asphalt. What’s missing are middle distillates like diesel, where growing demand and profitability lies.

My premise is that US (and perhaps global) refiners hit, late in 2014, the upper limit of the volume of condensate that they could process, if they wanted to maintain their distillate and heavier output–resulting in a build in condensate inventories, reflected as a year over year build of 100 million barrels in US C+C inventories.

Therefore, in my opinion the US and (and perhaps globally) C+C inventory data are fundamentally flawed, when it comes to actual crude oil inventory data. The most common dividing line between actual crude oil and condensate is 45 API gravity, although the distillate yield drops off considerably just going from 39 API to 42 API gravity crude, and the upper limit for WTI crude oil is 42 API.

In 2015, the EIA issued a report on US C+C production (what they call “Crude oil”), classifying the C+C by API gravity, and the data are very interesting:

https://www.eia.gov/todayinenergy/detail.cfm?id=23952

Note that 22% of US Lower 48 C+C production consists of condensate (45+ API gravity) and note that about 40% of US Lower 48 C+C production exceeds the maximum API gravity for WTI crude oil (42 API). The above chart goes a long way toward explaining why US net crude oil imports increased from late 2014 to 2015, even as US C+ C inventories increased by 100 million barrels, and I suspect that what is true for the US may also be true for the world, in regard to the composition of global C+C inventories.

Following is my analysis of global C+C production data versus estimated global crude oil production data, through 2014, using the available data bases:

Did Global Crude Oil Production Peak in 2005?

http://peakoilbarrel.com/worldwide-rig-count-dropping-again/comment-page-1/#comment-546170

How Quickly Can US Tight/Shale Operators Cause US C+C Production to Increase?

Because of equipment, personnel and financial constraints, in my opinion it is going to take much longer than most analysts expect for US operators to ramp up activity, even given a rising price environment.

Except for the 2008 “V” shaped price decline (which bottomed out in December, 2008), and the corresponding US rig count decline, the US (oil and gas) rig count has been around 1,800 to 2,000 in recent years. Note that it took about five years to go from around 1,000 rigs in 2003 to around 2,000 rigs in 2008, and it even took two years to go from around 1,000 rigs in 2009 to around 2,000 rigs in 2011.

And assuming a 15%/year rate of decline in existing US C+C production and assuming a 24%/year rate of decline in existing US gas production, the US has to put on line around 1.5 million bpd of new C+C production every year and around 17 BCF per day of new gas production every year, just to offset declines from existing wells. Based on 2013 EIA data, the estimated annual volumetric loss of production from existing US gas production exceeds the annual dry gas production of every country in the world, except for the US and Russia.

Generally the idea of oil glut in the USA and simultaneously increasing imports is something from Orwell novel 1984, where is was called doublespeak. If you’re an oil producer, you don’t pump oil unless you have orders for it. If you pump oil without orders, then you need your own storage to store it. You don’t ship any oil without getting paid for it. So oil glut theory claim that they are producers which have oil stored instead of shipped to customers and nobody wants this oil. So it is rotting in storage instead. And this bogus "theory" is propagated by MSM for more then 18 month now.   The best example of article that subscribes to this fallacy I found in NYT:

Stock Prices Sink in a Rising Ocean of Oil

The world is awash in crude oil, with enough extra produced last year to fuel all of Britain or Thailand. And the price of oil will not stop falling until the glut shrinks.

The oil glut — the unsold crude that is piling up around the world — is a quandary and a source of investor anxiety that once again rattled global markets on Friday.

As prices have dropped, the amount of excess production has been cut in half over the last six months. About one million barrels of extra oil is now being dumped on the markets each day.

But that means the glut is still continuing to grow, and it could take years to work through the crude that is being warehoused, poured into petroleum depots or loaded onto supertankers for storage at sea.

The shakeout will be painful, taking an even bigger toll on companies, countries and investors.

I think the author never saw a real oil tanker and does not understand how much it costs to keep oil in tanker for, say, a year.  Regular lease of 200 barrel oil truck is around $4000 a month. and at $40 the cost of 200  barrels is just $8000. So don't try this in your backyard ;-).  An ultra-large crude carrier, with a 3 million barrel capacity can well cost around $40,000-60,000 a day. So in one day you burn 1000-1500 barrels (if we assume 40 pre barrel) of your stored oil. That comes to 10-15% of stored oil in one year just in leasing costs  (reuters.com)

As this is a skeptical page, one thing the creates strong doubts in MSM coverage of the current oil prices slump is the idea of oil glut and Saudis supposed decision to "defend their share of the market" by supposedly flooding the market with oil (in reality they were unable significantly raise their exports (only by 0.3 Mb/d in 2016) and used predatory pricing  since mid 2014 to slam the oil prices). There are strong indications that that was the political decision  make by Saudi elite to hurt Iran after decision to lift sanctions was made by G7+Russia in mid 2014. It is due to this decision the country  started to  dump their oil on the market at artificially low prices undercutting other producers. They simply presented discount for each region they sell for their oil, essentially putting a price on each barrel they sold. 

But to cry about glut on oil in the country that imports more and more oil is something new to me.  This is something from Orwell novel 19884 and is called doublespeak.  and that's was exactly the situation with the USA in 2015. So MSM are deceiving the public. But why and what is the real situation, if we can decipher it ? 

The first thing to understand is that at a given stage of developing of drilling and other related technologies there is such thing as minimal price of oil below which production can be continued only at a loss. After all a well often costs $8 million, which need to be amortized for life of well. Which in case of shale/tight oil is approximately five-six years with more half of oil extracted in the first two years. The cost is much higher for non-conventional oil producers then for conventional producers. Canadian tar sand production is even more expensive. Deep water drilling is somewhere in between conventional and non-conventional oil.

There are different estimates, but most analysts agree that shale/tight oil producers need around $70-$80 per barrel to be able to pay their debts and around $50-$60 to break even. Slightly less for deep water oil ($40-$50). The picture below illustrated difference prices to produce different types of oil (  see below) is reproduced from What Me Worry About Peak Oil Art Berman, December 27, 2015 ):

This means that production of light oil from tight zones need the price of $70-80 per barrel to break even.  The same applies to extra heavy, deep water, and EOR projects. The implication seems to be that most industry investments do require higher prices and 2010-2013 were gold age for this types of oil as prices were close or above $100.

There were elements of glut in condensate and light oil before export restrictions were lifted because the US refineries were tuned to different type of oil. some even rejected blended oil as output from such oil in various fractions was different from "classic" oil to which refineries got used and that was cutting their profits.  But that's about it.

The key problem for shale/tight oil companies is that they have chance to stay afloat only at around $70-$80 per barrel and most get to much debt in 2010-2013 trying to increase production to survive the current price slump. In North America, 42 companies with $17 billion in debt filed bankruptcy in 2015, the highest level since the financial crisis in 2008. Of these filings, 36 companies with $16.7 billion in debt filed in the U.S.

Here is an old article Crude oil is surging (May 21, 2015) that asks important question "How we can have a glut of oil one week and the next we don't "

Crude oil is having a big day. West Texas Intermediate crude oil rallied by more than 3% to cross back above the $60 per barrel mark. On Wednesday, the Energy Information Administration said that crude inventories fell by 2.7 million barrels last week.

It was the third straight week of declines in inventories, which have seen a huge swell in recent months to the highest levels in at least 80 years. Earlier this week, we highlighted comments from Morgan Stanley, noting that following the oil crash, drillers are now prioritizing profitability over their output of barrels.

Brent crude oil, the international benchmark, was also higher, up by more than 2%. Here's a chart showing the jump in WTI...

mad man

I can't understand, as everyone of us that are not greedy SOB's. How we can have a glut of oil one week and the next we don't . I wouldn't leave this country for another , I'll stand and fight for what we had in the past!

We have to rid this county of the #$%$S that think they are running it! Dem.'s or GOP's are all #$%$'s! . This is not for the PEOPLE BY PEOPLE any more. WE ALL have to try and fix it .

H e

Crude is surging because the US dollar has no backbone anymore and losing it's world's reserve currency status.

okeydokey

Market manipulation. Nothing more. As for Business Insider, this is a propaganda rag.

heybert17

I really enjoy reading all the expert opinions on oil. One says it will plummet, another says it will surge, and another says it will stay steady. What are these people "experts" of? It can't be oil or they would all say the exact same thing.

Here is another similar thread:

Ves, 12/25/2015 at 2:23 pm

Steve,

I agree with your post about market dynamics between customers having to pay through their purchasing power in order to retire loans created by financial industry for oil companies.

But there are a few things that make this oil crash little bit “strange” to say at least:

  1. OPEC (and mainly Saudis + GCC) did actually something by not doing anything and that is refusing to cut their production. Well that is “man made” decision as Oman oil minister said and not decision by invisible hand of market. I interpret this mainly as political decision and not economical.
  2. Second. Wall Street was pretty much shocked if not pissed by that Saudi decision. I interpret that to be political reaction as well.
  3. There is no worldwide collapse of demand that justify 65-70% fall of the oil price. I am sorry but Wall Street is creating ninja loans for cars, student loans, mortgages from the thin air with the same speed in the US. I would say that is political decision as well. Worldwide collapse is not happening as of now either that would justify 65-70% drop of price. Contraction is happening in Europe but very very gradually except in some marginal countries like Greece, and war torn countries in ME and Africa. But these marginal countries did not even have any big consumption to begin with.
  4. Shale oil producers based on their balance sheet were bankrupt from Day 1. Why LTO even got the loans to begin with? That is also political decision and not an economic. Why are we waiting even a year after low prices for any major mergers, buyouts or bankruptcies? I am sorry but 100% of LTO are bankrupt so why Wall Street is extending and pretending and keeping them on a life support? Well it is again political decision.

So yes there are some market dynamics around this oil crash but there are a lot of political dynamics as well.

likbez, 12/25/2015 at 3:44 pm
Ves,

Thanks for the post. I agree with your reasoning.

To me too such a dramatic drop of oil prices looks like an engineered event, and is not only the result of supply and demand discrepancies. I think coming online way too many projects served a role, but not a decisive role. There was a political will to achieve that result.

One factor that might be in play ( it is NOT 100% reliable info) is that Saudis appropriated all or large part of Iran quota during sanctions period.

So on July 14, 2014, when agreement about lifting sanctions was reached, Iran asked to Saudis to compensate them for all this period. Saudis refused and started all this fun with declarations that they will defend their market share by all means possible.

Obama was surprisingly strongly “pro-deal”: On Tuesday Obama promised to use his veto on any domestic attempts to undermine the deal. “I am confident that this deal will meet the national security needs of the United States and our allies, so I will veto any legislation that prevents the successful implementation of this deal,” he said.”

Subsequently “sell as much as you can” regime for all OPEC members was instituted during the last OPEC meeting — no countries quotas anymore. Which, in a way, is the dissolution of OPEC.

So this “conspiracy theory” presupposes that this was the way Saudis reacted to lifting Iran sanctions, which threatened their share of oil market and also empowered their bitter regional enemy due to high oil prices. And they probably were angry as hell about the US administration duplicity — betrayal of the most reliable ally in the region, after the same trick with Mubarak.

Also it might well be that the agreement to lift sanctions from Iran was explicitly designed as a perfect Trojan horse for dropping oil prices to ease pressure from G7 economies which were in “secular stagnation” state. With Europe suffering from the cut from Russian market. In this case this was a real masterpiece of “divide and conquer” strategy.

Ves, 12/25/2015 at 5:32 pm
Thanks likbez.

I don’t pay too much attention to the price because the price is just the consequence of what buyers and sellers agree on. So there is no “engineering” in the classic sense of how we interpret in the real life. What bothers me is the amount of new and unprofitable shale oil that come to the market in the relatively short period of time. Well that is political engineering.

I thought for a while that this is all classic bubble of greed but then that did not make sense either. We know that bankers like bubbles because they always make money on swings, either going up or down. And that is ok with me; I accept that is how things work on this planet. But they could make bubbles with tulips and make money too? It has been done before. Oil is little bit different. You don’t piss oil on these swings when you are not making any money even on upswing.

So it is kind a troubling to see what is really going on. It looks to me that some breakdown of communication happened between major oil producers and major bankers. But time will tell.


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[May 20, 2019] May be tensions with Iran is the USA neocons strategy of containing China by depriving it economy of oil

China is Iran strategic ally. It will continue to buy Iranian oil.
May 20, 2019 | www.nakedcapitalism.com

charles 2 , May 20, 2019 at 6:43 am

Or maybe it is just one front: I.e. making globalisation difficult for the Chinese :
by pushing non Chinese Asians countries to de-integrate their supply chains with China and
by cutting its supply of oil though shortages induced by tensions in the Gulf.
The US knows that it can't be the sole superpower anymore any longer, so the strategy is to reverse globalisation so that no other global superpower (a Russian-Chinese with a dominating Persia in the Middle East) can emerge.
Far too early to say if the strategy will be successful or not.
As far as I am concerned, the silver linings would be that a long period of oil shortage could finally be the trigger to switch industrial infrastructure worldwide away from liquid and gaseous fossils, and that less globalised supply chain would be more robust to shocks, but if these silver linings were the ultimate goals, I could think of less adversarial ways to achieve that globally, with less money wasted on the military

jackson , May 20, 2019 at 8:41 am

The benefits of joint pricing mechanisms are also enormous. Currently, Iran has no choice because of the sanctions but to sell its oil – including from the shared fields – at massively reduced pricing that is comprised of its official selling price (OSP) minus the sanctions discount minus the incremental risk discount. This has resulted in Iran offering 'cost, insurance, and freight' cargoes for 'free on board' pricing, with the difference between the two covered by Iran. "Under this new agreement, Iranian oil from these shared fields will be sold based on Iraq's much higher three month moving average OSP pricing for cargoes, with no discounts at all, and the three month moving average for the effective spot market that Iraq has created and now controls," said the oil source.

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Geo , May 20, 2019 at 3:02 am

Thanks for the in-depth info. Lots to digest and research.

the US has acted in such bad faith so often in the early stages of conflicts that it's sensible to wonder how much of this account is accurate. It is very frustrating to be dealing with an informational hall of mirrors.

It's depressing to say but I when I read anything from domestic official sources or the media I can't help but think it's mostly lies. Not under the illusion that foreign actors are all righteous and benevolent, but as you said, our nation's track record with the truth in these scenarios is pretty tainted at this point. Just as we found out with Saddam and Qaddafi, these leaders have little reason to poke the dragon, and a lot of reason to build up defenses.

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PlutoniumKun , May 20, 2019 at 5:35 am

Interesting observations if true, and they certainly do make sense of a lot of the things that have been happening.

I see it hasn't dissuaded Trump though, this morning he is reported as doubling down on his threats to Iran. A big fear now is that Iran does not seem to be in the mood to give Trump the sort of symbolic 'win' he can use to climb down gracefully (and sack Bolton). The Saudi's can probably be scared into stepping back, but the Israeli's and the neocons want a hot war.

Its easy to see this gradually ratchet up step by step into an uncontrolled region wide conflict.

Ignim Brites , May 20, 2019 at 8:54 am

Not sure what to make of this article but the Anglo-American press is not providing much context for the recent ratcheting up of confrontation with Iran.

NotTimothyGeithner , May 20, 2019 at 10:11 am

The MSM is mostly stenographers and right leaning pundits. If no one tells them, they wouldn't know.

Also, the DC elites were pretty irked by Obama's Iran deal. They deferred to Obama and the Europeans who demanded the deal, but I think they live in a world where DC's enemies are the enemies of the American people who overwhelmingly supported the Iran deal. DC hasn't come to grips with this.

JBird4049 , May 20, 2019 at 12:20 pm

but I think they live in a world where DC's enemies are the enemies of the American people who overwhelmingly supported the Iran deal. DC hasn't come to grips with this.

Yes, because all pain, real blood and death, misery and horror that they cause in fighting what they assume putatively are "the American people's enemies" are never suffered by them, but only everyone else including the American people; all the financial benefits do go to them so it is all gain and no cost.

Ian Perkins , May 20, 2019 at 9:11 am

Will Lavrov and Wang Yi's guarantees prevent an Israeli nuclear attack on Iranian facilities, followed by US pledges to fully support Israel's right to self defence?

jackson , May 20, 2019 at 10:01 am

There are two kinds of weapons in the world offensive and defensive. The latter are cheaper, a fighter plane compared to a bomber. If a country does not (or cannot afford to) have offensive intent, it makes sense to focus on defense. It is what Iran has done. Moreover, its missile centered defense has a modern deadly twist -- the missiles are precision-guided. As an Iranian general remarked when questioned about the carrier task force: some years ago it would've been a threat he opined; now it's a target. Iran also has a large standing army of 350,000 plus a 120,000 strong Revolutionary Guard and Soviet style air defenses. In 2016 Russia started installation of the S-300 system. It has all kinds of variants, the most advanced, the S-300 PMU-3 has a range similar to the S-400 if equipped with 40N6E missiles, which are used also in the S-400. Their range is 400 km, so the Iranian batteries are virtually S-400s. The wily Putin has kept trump satisfied with the S-300 moniker without short-changing his and China's strategic ally. The latter continuing to buy Iranian oil.

Iran has friends in Europe also. Angela Merkel in particular has pointed out that Iran has complied fully with the nuclear provisions of the UN Security Council backed Joint Comprehensive Plan of Action i.e. the Iran nuclear deal. She is mustering the major European powers. Already alienated with Trump treating them as adversaries rather than friends, they find Trump's bullying tiresome. President Macron, his poll ratings hitting the lowest, is hardly likely to engage in Trump's venture. In Britain, Theresa May is barely able to hold on to her job. In the latest thrust by senior members of her party, she has been asked to name the day she steps down.

So there we have it. Nobody wants war with Iran. Even Israel, so far without a post-election government does not want to be rained upon by missiles leaky as its Iron Dome was against homemade Palestinian rockets. Topping all of this neither Trump nor Secretary of State Pompeo want war. Trump is as usual trying to bully -- now called maximum pressure -- Iran into submission. It won't. The wild card is National Security Adviser John Bolton. He wants war. A Gulf of Tonkin type false flag incident, or an Iranian misstep, or some accident can still set it off. In Iran itself, moderates like current President Hassan Rouhani are being weakened by Trump's shenanigans. The hard liners might well want to bleed America as happened in Iraq and Afghanistan.

Thomas P , May 20, 2019 at 12:13 pm

I don't trust those air defenses too much, where have they ever performed well? The scary part is where Iran assumes that USA can through repeated air strikes wipe out their missiles. They will from the start find themselves in a "use them or lose them" scenario and may launch everything as response to even a limited US strike, since they can't know if it is limited or the beginning of a full scale attack, and I doubt Iran is willing to go down without doing everything it can to hurt their enemies. (Possibly excluding Israel which is crazy enough to go nuclear in response).

[May 20, 2019] On The Cusp Of War Why Iran Won't Fold

May 20, 2019 | www.nakedcapitalism.com

Yves here. Glenn F sent along this story about recent events in the US-Iran conflict, many of which don't appear to have been reported in the English language press. Interestingly, the article takes the position that it is the Saudis that have been doing their best and largely succeeding in suppressing these reports.

Going into the weekend, it looked as if the US was trying to turn down the Iran threat meter a notch. Both Iran and the Saudis said they didn't want war but were prepared for one. Then a mystery rocket landed in the Green Zone in Baghdad. Oopsie. From the Wall Street Journal:

No major destruction was inflicted by the rocket, which landed near a museum displaying old planes and caused some damage to a building used by security guards, according to an official in the interior ministry.

The interior ministry official, who declined to be identified, said the rocket had landed around a kilometer from the U.S. Embassy inside Baghdad's Green Zone, where many other diplomatic missions and Iraqi government offices are located.

No group claimed responsibility. But security officials said security forces had found and seized a mobile rocket launcher in an area of Baghdad where Shiite militias, including some with close links to Iran, have a presence.

But also note this:

The Trump administration last week ordered a partial evacuation of its diplomatic missions in Baghdad and Erbil citing increased threats posed by Iran and its allies in Iraq. The Iraqi government has varying degrees of control over an array of armed groups, some of which are closely affiliated with Iran.

... ... ...

[May 18, 2019] If Washington were able to control everything, including "Big Prize" Iran, it would be able to dominate all Asian economies, especially China. Trump even said were that to happen, "decisions on the GNP of China will be made in Washington."

May 18, 2019 | www.moonofalabama.org

Peter AU 1 , May 18, 2019 2:15:40 AM | link

Without the oil, Trump has lost. Pepe Escobar is starting to get the picture

https://www.strategic-culture.org/news/2019/05/17/the-dead-dont-die-they-march-to-war/

"If President Trump had ever read Mackinder -- and there's no evidence he did -- one might assume that he's aiming at a new anti-Eurasia integration pivot centered on the Persian Gulf. And energy would be at the heart of the pivot.

If Washington were able to control everything, including "Big Prize" Iran, it would be able to dominate all Asian economies, especially China. Trump even said were that to happen, "decisions on the GNP of China will be made in Washington."...

...Arguably the key (invisible) takeaway of the meetings this week between Foreign Ministers Sergey Lavrov and Wang Yi, and then between Lavrov and Pompeo, is that Moscow made it quite clear that Iran will be protected by Russia in the event of an American showdown. Pompeo's body language showed how rattled he was.

What rattled Pomp: "Any use of nuclear weapons against Russia or its allies, be it small-scale, medium-scale or any other scale, will be treated as a nuclear attack on our country. The response will be instant and with all the relevant consequences,"

Trump may not have read Mackinder but Kissinger sure would have.

[May 16, 2019] Global fossil fuel subsidies hit record $5.2 trillion

May 16, 2019 | peakoilbarrel.com

Hightrekker

says: 05/15/2019 at 9:51 am

Global fossil fuel subsidies hit record $5.2 trillion –
https://desdemonadespair.net/2019/05/global-fossil-fuel-subsidies-hit-record-5-2-trillion.html

The Free Market in action.

[May 16, 2019] The IEA's Dire Warning For Energy Markets: prepare for higher, possible much higher oil prices

Notable quotes:
"... Upstream spending rose by a modest 4 percent, which only partially repairs the savage cuts following the 2014 bust, which saw upstream spending fall by about 30 percent. However, the IEA said that 2019 could be a bit of a turning point, with a "new wave of conventional projects" in the works. ..."
"... Despite the increase in spending on new oil projects, "today's investment trends are misaligned with where the world appears to be heading," the IEA said. "Notably, approvals of new conventional oil and gas projects fall short of what would be needed to meet continued robust demand growth." ..."
"... Geographically, investment [in solar and wind] is concentrated in rich countries. Roughly 90 percent of total energy investment – both for fossil fuels and for renewable energy – was funneled into high- and upper-middle income regions. Rich countries alone accounted for 40 percent of total energy investment, despite only making up 15 percent of the global population. ..."
May 15, 2019 | www.zerohedge.com

Authored by Nick Cunningham of Oilprice.com,

Global energy investment "stabilised" at just over $1.8 trillion in 2018, ending three years of declines.

Higher spending on oil, natural gas and coal was offset by declines in fossil fuel-based electricity generation and even a dip in renewable energy spending. China was the largest market for energy investment, even as the U.S. closed the gap.

After the 2014-2016 oil market bust, spending on oil and gas plunged, and only started to tick up last year. But the oil industry is not returning to its old spending ways. New investment is increasingly concentrated in short-cycle projects, namely, U.S. shale, "partly reflecting investor preferences for better managing capital at risk amid uncertainties over the future direction of the energy system," the IEA wrote in its report.

Upstream spending rose by a modest 4 percent, which only partially repairs the savage cuts following the 2014 bust, which saw upstream spending fall by about 30 percent. However, the IEA said that 2019 could be a bit of a turning point, with a "new wave of conventional projects" in the works.

Despite the increase in spending on new oil projects, "today's investment trends are misaligned with where the world appears to be heading," the IEA said. "Notably, approvals of new conventional oil and gas projects fall short of what would be needed to meet continued robust demand growth."

... ... ...

The good news is that costs continue to fall. Solar PV has seen costs decline by 75 percent since 2010, and onshore wind and battery storage costs are down by 20 percent and 50 percent, respectively. As such, a dollar spent on renewables buys a lot more energy than it used to, so flat investment is not entirely negative. And in a growing number of places, solar and wind are the cheapest option for power generation – increasingly cheaper than existing coal plants .

Geographically, investment [in solar and wind] is concentrated in rich countries. Roughly 90 percent of total energy investment – both for fossil fuels and for renewable energy – was funneled into high- and upper-middle income regions. Rich countries alone accounted for 40 percent of total energy investment, despite only making up 15 percent of the global population.

... ... ...


peakpeat , 1 hour ago link

Nothing, no EV's, solar, wind, coal or uranium is going to help. No tight shale, Arctic or North Slope oil is going to lift this sinking ship. There are no more new oil reserves to find and all the old fields are in a state of desperate high-tech extraction. We took all the easy stuff, Bakken and Permian are the last ditch effort. That's why all the playas have negative cash flow. That's why we are fecked.

Evil Liberals , 1 hour ago link

https://srsroccoreport.com/the-end-of-the-oil-giants-and-what-it-means/

Saudi Ghawar Field, admitted in decline

peakpeat , 59 minutes ago link

That was the last great elephant field. The largest resource ever discovered on the planet. Finally in decline. So goes Saudi Arabia. So goes OPEC. So goes mankind.

Evil Liberals , 2 hours ago link

Should have been building Nuclear Plants the last 20 years - that is Clean Energy.

Just don't build near the shore along the Ring of Fire or along Earthquake Fault Lines.

RDouglas , 2 hours ago link

Cheap crude was a 100 year party, the hangover has already begun. Fracked oil, tar sands, were a rescue remedy, funded by low interest rates, (debt). The massive population boom of the last century and a half directly coordinates with increasing oil production. If you aren't preparing yourself and your children for energy-down/population-down, you are insuring that YOUR decedents won't be among the 100 million or so people scratching out a living in North America in 100 years.

peakpeat , 57 minutes ago link

Before 1850 and the discovery of oil and coal, there were 1 billion people on the planet. Now there are 7 billion. 6 billion will die as the oil economy and oil infrastructure grinds to a halt. Better make you peace. Your plans are too late.

SilverSphinx , 5 hours ago link

Nuclear power generation is still King.

The use of nuclear power has resumed since the Fukushima disaster.

All the countries that swore off of nuclear power have returned to it and restarted their nuclear power plants and resumed construction on new plants.

Solarstone , 3 hours ago link

Let's hope you are right. It's the only viable option to oil

-- ALIEN -- , 3 hours ago link

2 words; Peak Uranium

"...Declining uranium production will make it impossible to obtain a significant increase in electrical power from nuclear plants in the coming decades."

Thorium Reactors...

"...A similar fate was encountered by another idea that involved "breeding" a nuclear fuel from a naturally existing element -- thorium. The concept involved transforming the 232 isotope of thorium into the fissile 233 isotope of uranium, which then could be used as fuel for a nuclear reactor (or for nuclear warheads). The idea was discussed at length during the heydays of the nuclear industry, andit is still discussed today; but so far, nothing has come out of it and the nuclear industry is still based on mineral uranium as fuel..."

https://www.resilience.org/stories/2017-01-18/peak-uranium-the-uncertain-future-of-nuclear-energy/

iSage , 2 hours ago link

There is a 1,000 years worth of uranium out west. I don't like the waste, used rods are hot for a long long time.

Cloud9.5 , 8 hours ago link

Mexican oil production is in decline. North Sea production is in decline. Alaskan production is in decline. There is a trend here.

peakpeat , 1 hour ago link

OPEC was the necessary cartel that helped to stabilize production and prices.

Now all of it including Saudi Arabia, Iran and the rest, all 14 nations past and present, is defunct. Output has been in decline since Nov. 2016. See IEA data or peakoilbarrel for a summary

JimmyJones , 8 hours ago link

US has enough coal to power us for over 200 years.

afronaut , 8 hours ago link

Not to mention natural gas

Ignorance is bliss , 8 hours ago link

Cool..How do I fill my BMW up with coal? How about that just in time delivery. Anyone ever try to power a semi-truck with coal? Eactly what do we pave the road ways with? Coal?

BangDingOw , 7 hours ago link

Yeesh. All wrong. Most important, slick Willie gave us our china trade problems, and then demand for raw commods in china soared. In response, his geniuses gave us the cfma, which was passed to let the JPMs of the world naked short commodities till the cows came home. However, china demand growth was so far in excess of supply growth that several of the WS firms saw the writing on the wall and went long. Thus the pols amazement when finding out v=bear stearns was actually long oil. Finally prices got high enough that supply growth started overtaking demand growth. We have been going down , on average, since. china demand late 90s oil wa 3Mbpd, currently 13Mbpd

[May 13, 2019] Buffet bet is a bet that the ol price will go up

May 13, 2019 | peakoilbarrel.com

shallow sand x Ignored says: 05/08/2019 at 2:05 pm

Buffett put it very simply. If oil prices go up OXY can make a lot of money.

$100 oil they will make a lot, especially on their CO2 projects in the Permian, and in Oman, where they own a decent chunk of flowing BOPD.

It's a bet on oil going up, plus getting 8% interest for loaning them $10 billion. They go with preferred stock for the favorable dividend tax treatment.

It is only a bad deal if oil stays here or below long term. Assuming a 10-15 year cycle, by 2025-2030 oil will surely rocket up.

Boomer II x Ignored says: 05/09/2019 at 12:41 am
It's a good deal for Berkshire, but not a good deal for Occidental.

"The 8 percent yield on the preferreds is way above Oxy's pre-bidding dividend yield of 4.7 percent and equivalent to a pre-tax cost of debt of about 10 percent, roughly triple the company's bond yield. That's before counting the warrants, equivalent to 9 percent dilution on the pro forma share count, plus the redemption premium.

This wasn't a bet on Oxy, the Permian shale basin or even oil prices; Buffett could have just bought stock in the open market for that. This was about extracting as much as possible from a company that really needed the promise of a big slug of cash."

https://www.bloomberg.com/opinion/articles/2019-05-08/chevron-vs-occidental-for-anadarko-what-will-winning-mean

Boomer II x Ignored says: 05/09/2019 at 12:45 am
If Occidental gets the deal, its bond rating will go down.

https://seekingalpha.com/news/3460887-moodys-says-likely-downgrade-occidental-wins-anadarko

Boomer II x Ignored says: 05/08/2019 at 2:17 am
According to Buffett, he is betting on oil prices and the Permian.

Also, Berkshire might have bought Anadarko directly, if asked. Which seems odd.

"Asked why Berkshire wouldn't just buy Anadarko itself, Buffett said, 'That might have happened if Anadarko came to us, but we wouldn't jump into some other deal that we heard about from somebody else coming to us seeking financing.'

Later in the interview, longtime investing partner and vice chairman Charlie Munger responded to the question as well, saying, 'Nobody asked us to.'"

https://www.cnbc.com/2019/05/06/buffett-says-occidental-petroleum-investment-is-a-bet-on-oil-prices-over-the-long-term.html

[May 13, 2019] Will Trump pressure on Iran result in the spike of oil prices?

May 13, 2019 | peakoilbarrel.com

Ron Patterson x Ignored says: 05/07/2019 at 4:51 pm

currently they are forecasting about a 750 kb/d increase annually from Dec 2018 to Dec 2020.

Yes, but they are predicting the lions share of that gain in 2019. That is they are predicting a US increase in production of 1,200 kb/d in 2019 and a gain of 350 kb/d in 2020. (Dec. to Dec. in each case.)

Note: This is C+C, not Total Liquids.

Obviously, they are expecting a slowdown in the oil patch in 2020. That slowdown just may come about a year earlier than expected.

Dennis Coyne x Ignored says: 05/08/2019 at 7:42 am
Ron,

I agree, 2019 is too high, but I still think the overall change from Dec 2018 to Dec 2020 will be about right (2019 increase will be less than STEO, but 2020 increase will be greater).

It is doubtful their forecast will be precisely correct, nor will anyone's, but the overall increase from Dec 2018 to Dec 2020 seems pretty reasonable. I agree that the expected increase in 2019 will be less than the 1.2 Mb/d the EIA currently forecasts, about 700 kb/d this year and 850 kb/d next year seems more reasonable if Brent oil prices gradually rise to $85/b (2018$) over the May 2019 to Dec 2020 period as I expect (with lots of volatility along the way). Basically I expect the centered average 5 week Brent spot price may reach $85/b some time before Dec 31, 2020.

Ron Patterson x Ignored says: 05/08/2019 at 8:19 am
Dennis, the EIA clearly sees the slowdown in the shale oil patch coming. They think it will hit next year, 2020. The EIA has a history of being overly optimistic. Yet yet, in this case, you think they are being pessimistic. You see shale production increasing in 2020 over 2019. That just seems very strange to me.

However, I will just have to leave it at that. We will both just have to wait and see.

Dennis Coyne x Ignored says: 05/09/2019 at 7:27 am
Ron,

I expect oil prices will be higher towards the end of 2019, profits for tight oil producers will be higher, there will be a higher well completion rates (higher capital spending budgets) in 2020 as a result and the rate of increase in tight oil output will increase a bit (I am assuming 700 kb/d in 2019 and 800 kb/d in 2020, this is essentially no change in the rate of increase). In the end we don't know as we don't know future oil prices and how they will affect investment decisions. The main point is that in the end the output in Dec 2020 may be pretty close to the EIA estimate. That estimate is neither pessimistic or optimistic, it is realistic. The path that output will take from March 2019 to Dec 2020 is impossible to predict, a straight line guess is as good as any.

Ron Patterson x Ignored says: 05/09/2019 at 7:49 am
I understand Dennis, hope springs eternal in the shale oil patch, for some folks anyway.

I agree that oil prices are about to spike. World oil production is currently falling like a rock. Brent prices are in backwardation, meaning traders also expect prices to rise. However, I do not believe, as you do, that this will automatically cause a dramatic increase in oil production. The effect will be feeble at best. Well, in my opinion anyway.

Dennis Coyne x Ignored says: 05/09/2019 at 1:27 pm
Hi Ron,

I also do not expect a dramatic increase, I actually expect the recent rate of annual increase of 1.6 Mb/d to slow to about half of the previous rate (0.8 Mb/d) and continue to slow over time to near zero by 2024.

We'll see.

[May 13, 2019] Does EIA preducttion of dramatic rise in shale oil output means that they predict dramatic rise on oil prices: shale is not profitable for most companies below $70-$80 a barrel.

May 13, 2019 | peakoilbarrel.com

Ovi x Ignored says: 05/07/2019 at 5:04 pm

Attached are the changing monthly STEO projections for February, March and April for the lower 48 production. Today's projection, April, has added 230 kb/d day by year end 2019 to the March projection and close to 300 kb/d in 2020. The April projection also shows an increase of 960 kb/d from Dec 18 to Dec 19. For Dec 19 to Dec 20, the increase is only 420 kb/d, less than half of the 18 to 19 increase. Any speculation/ideas for the lower increase for 19 to 20. The G of M drops by 70 kb/d from Dec 19 to Dec 20.

Ron Patterson x Ignored says: 05/07/2019 at 5:37 pm
Thanks, Ovi.

You notice that the April 19 STEO has the lowest production numbers for Jan. Feb. and April 2019 but the highest numbers as they move into the second half of 2019 and all of 2020.

I don't know what to make of this except that I find it rather amusing.

GuyM x Ignored says: 05/07/2019 at 6:27 pm
I found it insulting to my intelligence (not an exceptionally difficult task), but now that you mention it, I can imagine some Lewis Carroll feel to it.
ProPoly x Ignored says: 05/07/2019 at 4:48 pm
How are they adding 100k+ net non-Gulf when their own drilling productivity reports have the Permian at less than half that growth? With Eagle Ford and Bakken not growing. Doesn't add up even before taking out legacy decline elsewhere.

[May 13, 2019] Price range $55-65 WTI would still be ok for small traditional producers, but shale producers need $75-80

Notable quotes:
"... A word about the LTO metric of the month, free cash flow. Cash flow ain't "free" if one is still in debt. IMO, 1Q19 was awful for the US shale oil industry. It used cash flow for buy backs, to meet dividend demands by pissed off investors, to pay absurd prices for undeveloped acreage in the Permian, for reserve replacement (75% of ALL wells now drilled in America's shale basins simply offset last year's annualized decline) and still eked out a little growth. Nothing to very little went of nothing went to voluntary deleveraging. At less than $75-80, it can't be done. ..."
May 13, 2019 | peakoilbarrel.com

shallow sand x Ignored says: 05/11/2019 at 11:32 pm

Dennis. Things were going good until 11/18, when the price started to crater. Thankfully we are back up. However, our price for December through March averaged $48 and change, which is making money, but not much.

Expenses have stayed relatively stable. Labor goes up a little each year. Electricity has actually dropped a few percent. Chemicals have stayed the same since we received a 10% cut in 2016. Steel is up some, so rods and tubing are a little higher.

$55-65 WTI would still be ok. Liked $70s last fall, before the Donald got involved with Iran waivers and tweets.

My comment was poking at the Donald, et al, who think that since $25 was a great price in 1990 it should still be ok today.

Clearly, although $55-65 is good for us, maybe not good enough for others. In particular, the service companies who continue to lay bleeding to death on the side of the road.

We still have no plans to drill. Have five workovers planned for summer to fight the decline.

Mike Shellman x Ignored says: 05/12/2019 at 10:37 am
Dennis, you are kind; thank you. My belief is that if one can't make money at $50/2.50, and cope with 30% price swings for months at a time, one should be in the lawn mowing business instead. The US shale oil industry could therefore keep most of America looking like Augusta National.

A word about the LTO metric of the month, free cash flow. Cash flow ain't "free" if one is still in debt. IMO, 1Q19 was awful for the US shale oil industry. It used cash flow for buy backs, to meet dividend demands by pissed off investors, to pay absurd prices for undeveloped acreage in the Permian, for reserve replacement (75% of ALL wells now drilled in America's shale basins simply offset last year's annualized decline) and still eked out a little growth. Nothing to very little went of nothing went to voluntary deleveraging. At less than $75-80, it can't be done.

Hughes has a new report out clearly showing Mother Nature is having Her say in the shale oil phenomena. Nobody messes with Mother Nature.

Dennis Coyne x Ignored says: 05/12/2019 at 11:27 am
Thanks Mike,

Agree higher oil prices are needed for tight oil producers to reduce their debt. If long term oil prices remain $50/b, they are toast.

I read a blurb on the new Hughes paper, but I am a bit of a cheapskate and was not willing to put down $250 for the report so I have not read it.

From your perspective, do you think oil prices are likely to remain $50/b long term? (lets call it the 52 week average oil price). It seems to me there will not be adequate supply on the World oil market at $50/b, perhaps $65 or $70/b (in 2019 US$) would do it.

You know infinitely more than me about the oil business and you have been in it for a while (40+ years as an owner I believe), so your take would be of interest to me and I imagine everyone who reads this blog.

Synapsid x Ignored says: 05/12/2019 at 11:46 am
Mike,

Robert Rapier has an article–new, I think–about Free Cash Flow at OilPrice. Nicely detailed.

[May 13, 2019] Samuelson points out how flawed economists are. And that includes projection of oil production

May 13, 2019 | peakoilbarrel.com

Boomer II x Ignored says: 05/12/2019 at 9:09 pm

As many of you, I don't expect business as usual to continue. We get projections based on past trends, but with oil being finite and the globe already showing the effects of climate change, I think we are in for a tumultuous future.

Samuelson points out how flawed economists are.

https://www.washingtonpost.com/opinions/economists-often-dont-know-what-theyre-talking-about/2019/05/12/f91517d4-7338-11e9-9eb4-0828f5389013_story.html

[May 12, 2019] Could it be all about the oil caucus99percent

May 12, 2019 | caucus99percent.com

Could it be all about the oil?


span y gjohnsit on Fri, 05/10/2019 - 11:48am The Trump Administration made it perfectly clear: no more waivers on Iranian sanctions. No exceptions .

"We're going to zero. We're going to zero across the board," US Secretary of State Mike Pompeo told reporters after the White House made the announcement in a statement. "There are no (oil) waivers that extend beyond that period, full stop," he said, adding that there would be no grace period for those economies to comply.

Got it? No exceptions. This is about values and principles. This is about Iranian terrorism (or some such nonsense).

Wait a sec. What happened to 'no more waivers, no exceptions'?
Well, ya see, a funny thing happened along the way.


Iraq will soon finalize a large-scale, long-term deal for the development of oil fields in the South with Exxon and PetroChina. The 30-year contract will involve investments of US$53 billion and potential returns for Baghdad of as much as US$400 billion over its lifetime, Prime Minister Adel Abdul Mahdi told media this week.

I know what you are thinking, but I am here to tell you conclusively that the timing is all a coincidence. Billions of dollars in Exxon profits have no effect on our foreign policy decisions.

Iraqi Prime Minister Adel Abdul Mahdi said on Tuesday there was no link between an initial oil agreement his government was about to sign with Exxon Mobil and its receipt of waivers from the United States exempting it from sanctions on Iran.

There you go. A deeply corrupt Iraqi politician denies that the two events are related. What more proof do you want?

span y magiamma on Fri, 05/10/2019 - 11:53am
Great news

More oil extraction. But just not our oil extraction. Oh well, oil well...

span y Not Henry Kissinger on Fri, 05/10/2019 - 12:29pm
To paraphrase John McCain...

The US is an oil company masquerading as a country .

span y Alligator Ed on Fri, 05/10/2019 - 2:38pm
Do I detect a bit of cynicism here?

@Not Henry Kissinger

I know what you are thinking, but I am here to tell you conclusively that the timing is all a coincidence. Billions of dollars in Exxon profits have no effect on our foreign policy decisions.

Of course it's a coincidence! Have you never heard about America's great humanitarian wars, a phrase which we owe to great patriot Susan Powers? And, do you not fail to realize that Barack Hussein O'Bama* was our greatest president since Franklin Pierce?

*You know also that BHO is a black Irishman (groan).

The US is an oil company masquerading as a country .

span y Anja Geitz on Fri, 05/10/2019 - 5:38pm
I'm a bit surprised

@Not Henry Kissinger

John McCain was that astutely satiric. In any case, I think I'll borrow it if you don't mind.

The US is an oil company masquerading as a country .

span y snoopydawg on Fri, 05/10/2019 - 4:51pm
Nothing like folding a winning hand early

Iraq should have said that they will buy Iranian oil for as long as they want in exchange for signing the agreement. But I'm guess that the guy who inked the deal is one of our puppets?.

span y dervish on Fri, 05/10/2019 - 6:00pm
I wonder if Iraq could launder

@snoopydawg Iranian oil as their own, ad infinitum?

Iraq should have said that they will buy Iranian oil for as long as they want in exchange for signing the agreement. But I'm guess that the guy who inked the deal is one of our puppets?.

[May 06, 2019] Think of bomb-bomb-bomb as OPEC by other means

Notable quotes:
"... ...The Saudi-led OPEC+ production cut strategy is still in place, but it is partly successful due to the negative repercussions of the sanctions on Iran and Venezuela. The high level of compliance with the agreement (128%) is based on the loss of these particular volumes. At the same time, Saudi Arabia, UAE and Russia, are sticking to their roles, cutting as needed. Optimism about Iraq is based on uncertain assumptions, while Libya's overall situation is highly volatile. ..."
May 06, 2019 | www.zerohedge.com

The removal of U.S. waivers for leading oil importers of Iranian oil and gas is putting the Tehran regime under severe pressure. While Trump's target of reducing Iranian production to zero is unrealistic, the impact of the sanctions is undeniable.

...The Saudi-led OPEC+ production cut strategy is still in place, but it is partly successful due to the negative repercussions of the sanctions on Iran and Venezuela. The high level of compliance with the agreement (128%) is based on the loss of these particular volumes. At the same time, Saudi Arabia, UAE and Russia, are sticking to their roles, cutting as needed. Optimism about Iraq is based on uncertain assumptions, while Libya's overall situation is highly volatile.

...In the coming weeks, as analysts focus on production figures, storage volumes and demand, OPEC will be focusing on defusing pressure to increase production, while at the same time the Saudi-led faction will likely confront the Tehran-Venezuela (and possibly Iraqi) axis. Iran has openly threatened to undermine OPEC's stability if no support can be gathered before the June meeting. In several statements to the press, Iran's oil Minister has warned that OPEC is in danger of collapse. Tehran threatens at present to take all necessary measures to block oil and gas flows from OPEC members that are supporting the U.S. sanctions regime. At the same time, Tehran has warned to take measures against countries trying to fill in the supply gap left by Iran. Zanganeh reiterated the latter during a meeting with OPEC secretary general Barkindo in Tehran. Barkindo reacted by saying that OPEC will do its utmost to depoliticize oil and gas policies of the organization. OPEC's SG statements however look very bleak in light of the growing heat in the conflict between Iran and Saudi Arabia.

scraping_by , 4 hours ago link

Much of the shambolic belligerence and pointless aggression of Not-A-Neocon Trump can be seen as cutting down world oil production in service of higher prices for SA's royals and, a very distant second, US shale producers. Venezuela isn't an existential threat to the US, not like Goldman Sachs, but embargoes on oil would keep the price up. Iran's not an existential threat, but oil embargoes... Syria's not an existential threat but putting the oil on the black market...

Think of bomb-bomb-bomb as OPEC by other means.

[May 05, 2019] A sharp spike in oil prices is another danger with which the administration now lands itself. Together, US sanctions against Venezuela and Iran will take roughly 2 million barrels of oil a day out of the market

Notable quotes:
"... First, the new turn in the administration's Iran policy appears to mark a decisive defeat for President Donald Trump in his long-running battle with his foreign policy minders. It is now very unlikely Trump will achieve any of his policy objectives, a number of which represent useful alternatives to the stunningly shambolic strategies advanced by Pompeo, National Security Advisor John Bolton, and other zealots in the administration. ..."
"... Second, this administration's foreign policy has steadily assumed an irrational character that may be unprecedented in U.S. history. This is perilous. The administration's near-paranoiac hostility toward Pyongyang and Moscow are cases in point. So is its evident indifference to alienating longstanding allies across the Atlantic and in Asia. As of this week, however, Pompeo's "down to zero" policy makes Iran the most immediate danger. ..."
"... The question is why this administration's foreign policies are so amateurish and discombobulated. Corollary question: Why is the president surrounded by policy advisers so thoroughly at odds with those of his objectives that are worthwhile? ..."
"... Trump may not have chosen his foreign policy team so much as its members have been imposed upon him. ..."
"... He was self-evidently behind the decision to move the U.S. embassy in Israel to Jerusalem and the announcement in March that Washington recognizes Israeli jurisdiction over the Golan Heights. ..."
"... It is unlikely anything is all done in connection with the embassy move and the Golan Heights decision. Both run diametrically counter to international law and both have significantly damaged U.S. credibility in the Middle East. Trump, in short, makes his own miscalculations, and they are as grave as any made by the Pompeo–Bolton axis. There are few wise heads in this administration. ..."
"... You guys fail to see that the notion that Trump and Co genuinely seek to "improve ties" with Russia is a key element of the larger "Russiagate" psyop, a truly laughable idea which is disproved not only by the longer term historical record, but also by the veritable mountain of evidence that has accrued since Trump came into office demonstrating that this administration has only EXACERBATED the empire's long running and profoundly anti-Russian foreign policy agenda. ..."
"... Irrational foreign policy? I wish the United States would just drop the charade and declare itself a global empire. What we see is the foreign policy of empire. Is this rational or isn't it? ..."
"... Current US foreign policy is aligned to impose maximum pressure on countries like Venezuela and Iran in order to pressure those governments and hopefully topple them with sanctions. The entire World is hungry for oil and the demand for oil is expanding at an exponential rate which in turn guides US foreign policy. ..."
The US Moves on Iran's Oil Market as an Expression of an Irrational Foreign Policy by Patrick Lawrence
April 29, 2019 | consortiumnews.com

65 Comments

Patrick Lawrence gauges the backfiring potential of Pompeo's withdrawal on Thursday of U.S. sanction waivers from eight major importers.

Secretary of State Mike Pompeo's announcement last week that no importer of Iranian oil will henceforth be exempt from U.S. sanctions is as risky as it is misguided. The withdrawal of waivers as of this Thursday effectively gives eight importers dependent on Iranian crude -- India, Japan, South Korea, China, Turkey, Taiwan, Italy, and Greece -- 10 days' notice to adjust their petroleum purchases.

This is now a full-court press: The intent is to cut off Iran's access to any oil market anywhere as part of the administration's "maximum pressure" campaign against Tehran. "We are going to zero," Pompeo said as he disclosed the new policy.

Nobody is going to zero. The administration's move will further damage the Iranian economy, certainly, but few outside the administration think it is possible to isolate Iran as comprehensively as Pompeo seems to expect.

Insights on Overreach

There are a couple of insights to be gleaned from this unusually aggressive case of policy overreach.

First, the new turn in the administration's Iran policy appears to mark a decisive defeat for President Donald Trump in his long-running battle with his foreign policy minders. It is now very unlikely Trump will achieve any of his policy objectives, a number of which represent useful alternatives to the stunningly shambolic strategies advanced by Pompeo, National Security Advisor John Bolton, and other zealots in the administration.

Weakened by relentless "Russia-gate" investigations, for instance, the president has little chance now of improving ties with Moscow or negotiating with adversaries such as Iran and North Korea, as he has long advocated.

In a Face the Nation interview Sunday, Iranian Foreign Minister Mohammad Javad Zarif said Tehran would be open to bilateral talks under the right conditions. It was the second time in a week that Zarif made this point. But those around Trump, not least Bolton and Pompeo, are sure to block any such prospect -- or sabotage talks if they do take place, as they did Trump's second summit with Kim Jong-un, North Korea's leader, in late February.

Second, this administration's foreign policy has steadily assumed an irrational character that may be unprecedented in U.S. history. This is perilous. The administration's near-paranoiac hostility toward Pyongyang and Moscow are cases in point. So is its evident indifference to alienating longstanding allies across the Atlantic and in Asia. As of this week, however, Pompeo's "down to zero" policy makes Iran the most immediate danger.

Persian Gulf Chokepoint

Iranian officials, including Zarif, now threaten to close the Strait of Hormuz, chokepoint of the Persian Gulf, if Iranian tankers are prevented from passing through it. This is an indirect warning that the Iranian military could confront the U.S. Fifth Fleet, which operates in the Gulf and adjacent waters.

A sharp spike in oil prices is another danger with which the administration now lands itself. Taken together, U.S. sanctions against Venezuela and Iran are intended to take roughly 2 million barrels of oil a day out of the market.

Saudi Arabia has pledged to make up the lost supply, but many analysts question its ability to sustain an increase in output given the advancing depletion of its long-productive Ghawar field. Spare capacity among producers is already wafer-thin. Do we need to risk another oil crisis, given the flagging global economy?

Trump's foreign policy minders also risk alienating allies -- South Korea, Japan, India, the Europeans -- whose cooperation the U.S. needs on numerous other policy questions. In the case of China, the administration puts progress on a nearly complete trade deal and Beijing's leverage with North Korea in jeopardy.

There are other cases demonstrating the Trump administration's apparently thorough indifference to collateral damage and the animosity of allies. Since the U.S. abandoned the Paris climate pact and the 2015 accord governing Iran's nuclear program, the Europeans have hardly contained their anger; they are openly furious now about the tightened sanctions against Iran. The South Koreans, frustrated with Washington's intransigent stance toward Pyongyang, now search for ways to engage the North despite many layers of UN and U.S–imposed sanctions.

The question is why this administration's foreign policies are so amateurish and discombobulated. Corollary question: Why is the president surrounded by policy advisers so thoroughly at odds with those of his objectives that are worthwhile?

Trump arrived in Washington an outsider: This is where answers to these questions begin. This limited the New York dealmaker to a shallow pool from which to build his administration. His never-ending Russia-gate problem further handicaps him. This administration is among the most opaque in recent history, so certainties as to its internal workings are hard to come by. But Trump may not have chosen his foreign policy team so much as its members have been imposed upon him.

However his advisers arrived in the administration, they are a toxic combination of neoconservatives, many drawn from the Heritage Foundation , and evangelical Christians . Bolton is emblematic of the former, Pompeo of the latter. This is the current complexion of American foreign policy.

Zealots and Crusaders

Both camps are populated with zealots and crusaders; both cultivate irrational world views rooted in extremist ideology and sentiment. Bolton's obsession is the restoration of unchallenged U.S. supremacy. Pompeo is said to view adversaries such as North Korea and Iran as George W. Bush did : The U.S. is in an "end times" war with Gog and Magog, biblical manifestations of the evil abroad in the world.

To be clear, there is more wrong than right in the president's foreign policy thinking. He was self-evidently behind the decision to move the U.S. embassy in Israel to Jerusalem and the announcement in March that Washington recognizes Israeli jurisdiction over the Golan Heights.

"This is very important strategically for victory, heights, because you're up high, very important," Trump said over the weekend. "Fifty-two years ago this started [when Israel captured Golan from Syria in the 1967 war] and I did it quickly. Done. It's all done."

It is unlikely anything is all done in connection with the embassy move and the Golan Heights decision. Both run diametrically counter to international law and both have significantly damaged U.S. credibility in the Middle East. Trump, in short, makes his own miscalculations, and they are as grave as any made by the Pompeo–Bolton axis. There are few wise heads in this administration.

At the same time, Trump's desire to negotiate with adversaries -- Russia, Iran, North Korea -- is entirely defensible. But the "down to zero" Iran policy to take effect this week can be read as a signal of the president's failure to counter the foreign policy Manicheans who surround him.

There may be skirmishes to come, but the battle is over. We must now watch as extremist ideologues accelerate America's already evident decline as a global power -- along with its increasing isolation.

Patrick Lawrence, a correspondent abroad for many years, chiefly for the International Herald Tribune , is a columnist, essayist, author, and lecturer. His most recent book is "Time No Longer: Americans After the American Century" (Yale). Follow him @thefloutist. His web site is www.patricklawrence.us. Support his work via www.patreon.com/thefloutist .


Brian James , May 2, 2019 at 12:23

Apr 30, 2019 A New Mega Cartel Is Emerging In Oil Markets

China and India -- two of the world's largest oil importers and the biggest demand growth centers globally -- are close to setting up an oil buyers' club to have a say in the pricing and sourcing of crude oil amid OPEC's cuts and U.S. sanctions on Iran and Venezuela, Indian outlet livemint reports, citing three officials with knowledge of the talks.

https://youtu.be/lgkGNyd6pR4

vinnieoh , May 3, 2019 at 14:33

Thanks for that link, I'm sure I'll follow this. I feel the same apprehension the narrator's inflection seemed to convey in closing "We'll have to see where this leads." That apprehension is that this will push the war-mongers to accelerate the timetable for an attack on Iran.

Stuart Davies , May 1, 2019 at 09:00

Sorry to see that Consortium News still maintains their commitment to the ludicrous premise that Trump is "pro Russian" at heart:

" the new turn in the administration's Iran policy appears to mark a decisive defeat for President Donald Trump in his long-running battle with his foreign policy minders .Weakened by relentless "Russia-gate" investigations, for instance, the president has little chance now of improving ties with Moscow or negotiating with adversaries such as Iran and North Korea, as he has long advocated."

Utter nonsense. You guys fail to see that the notion that Trump and Co genuinely seek to "improve ties" with Russia is a key element of the larger "Russiagate" psyop, a truly laughable idea which is disproved not only by the longer term historical record, but also by the veritable mountain of evidence that has accrued since Trump came into office demonstrating that this administration has only EXACERBATED the empire's long running and profoundly anti-Russian foreign policy agenda.

O Society , April 30, 2019 at 13:20

Irrational foreign policy? I wish the United States would just drop the charade and declare itself a global empire. What we see is the foreign policy of empire. Is this rational or isn't it?

https://opensociet.org/2019/03/21/the-american-emperor-has-no-clothes/

elmerfudzie , April 30, 2019 at 13:16

Asymmetric warfare with Iran has already begun. Internet based "worms" and economic sanctions have, so far, been successfully coordinated in concert with our rather reluctant Western Occident allies. These attacks have been more or less been kept at bay. The alternative, direct military intervention would prove to be a new "holocaust" and would target roughly seventy separate nuclear research sites and dozens of scattered air force bases. The weapons of choice would be DU-38 munitions and huge bombs. DU has a proven record against fortified concrete and armored structures. It has an infamous reputation for leaving permanent, radioactive "ground shine" wherever used. Lest we all (never) forget the absolutely horribly deformed children born in southern Iraq who suffered prenatal exposure to radiation poisoning! In war, it's always the most vulnerable and innocent to suffer the most for example; Yemeni civilians.

The militant factions of our Pentagon and Congress (found within both sides of the political aisle) will continue to pursue the long range plan I outlined some time ago in a CONSORTIUMNEWS commentary. To recap it, this tug-of-war is not so much about trading in the USD as it is about a global oil glut. I believe it was Bandar bin Sultan who commented that, and I'm paraphrasing him here; there's plenty of relatively easy oil everywhere, the idea to grasp is, what countries will be permitted to extract and sell it? Thus, the global and persistent NeoCon plan seems to be to cap or severely restrict, Libyan, Iranian and Iraqi oil reserves, meanwhile making backroom deals that permit a few SCO, (reluctantly) Russian, Saudi, African and US/Canadian reserves to flourish on the open market. Venezuelan oil will act as the back up resource should, a regional nuclear war in the middle east result in irreversible damage to "friendly" refineries and ready access to them. Again, ground shine due to a deployment of neutron A-weaponry (N-Bombs)..most likely from Israel. Ah!, sweet treachery in times of war eh? Need I remind our CONSORTIUMNEWS readership of Hitlers last minute betrayal of Stalin? The Israelis want a "piece of the oil action" too!

Us , April 30, 2019 at 10:59

So sorry to see the country ripped apart. Hatful , boasting reprobates behind the steering wheel

vinnieoh , April 30, 2019 at 10:05

Thank you Mr. Lawrence for, if nothing else, hypothesizing or postulating why the Trump administration foreign policy is as you say, so amateurish and discombobulated. But I do agree with Drew Hunkins below that for whatever reasons(*), Trump himself has always vilified and mocked Iran. He is nothing if not a scurrilous opportunist, and threatening Iran just fits his personality as a bully. Very few if any of the other kids on the playground have the guts or integrity to come to Iran's defense.

It lightened my spirit just a little bit when you said that the Trump administration "is one of the most opaque in recent history." Why, just yesterday I heard our glorious leader say that his administration is the most transparent ever in American history. I wish that I should live long enough to see the use of such superlatives disappear from our discourse.

I somehow missed Mr. Zarif's several statements concerning a willingness to engage in bilateral talks. That is almost flabbergasting. Which Iranians could possibly believe there is an honest negotiator now anywhere close to the levers of power in DC? But Zarif continues to hold to and operate in the terms of classic diplomacy: do not close any doors forever, and; do not relinquish the high ground of sensibleness and integrity to your opponent. But, surely there aren't ANY Iranians who believe that the US would make any concessions, de-escalate any of our threats, or place a muzzle on our two rabid dog allies.

(*) It is my firm belief that the overwhelming motivation for much of what Trump does goes back directly to the annual DC correspondents dinner where Obama publicly and rightfully humiliated and mocked that fat-assed moron. And well he should have. It didn't miss my notice that Trump once again skipped that event. He will never attend – it was the absolute lowest point of his public life (so far), everybody laughing at him and that horrible skinny n####r twisting the rhetorical knife relentlessly. I'm reminded of a short story of Harlan Ellison's called "Stardust." I'll leave it to the curious to follow that lead. Narcissism as a genetic "addiction."

vinnieoh , April 30, 2019 at 10:17

Right after the 2016 election I posted something to the effect that perhaps we should ask native Americans if they think it is unusual that an unprincipled real estate speculator is now the captain of the state.

Zhu , April 30, 2019 at 01:22

Thanks for confirming that Pompeo is a Dispensationalist, eager for the End of the World.

Roberto , April 30, 2019 at 08:01

The neocons, Bolton and Pompeo, are not going to put an end to the world, because the Greek Islands need nothing from the United States. They only need a little gasoline for their cars and motor scooters. However, the neocons are going to put an end to the petrodollar, because no one on earth can trust the "out of control government" of the United States, any longer.

CitizenOne , April 30, 2019 at 01:06

During the Iraq war there were many calls from conservatives to not stop at the border with Iran. They supported a plan to roll US tanks and other offensive forces until they reached Tehran and obliterated it defeating the rogue nation and securing Iranian oil fields.

The scenario proposed today to strangle resource rich nations by war hawks is similar to the post war imaginings posed by Patton to keep on going until the US armed forces reached Moscow. It is similar to the plans of MacArthur to lay down a nuclear radiation barrier along North Korea's northern border with China to create a lethal ionizing radioactive zone or no mans land to prevent China from sending Chinese troops across the border.

Each one of these proposed but never implemented war strategies in hind sight would have probably netted the US great gains at minimal risk.

On one hand, the current administrations strategy and tactics to wage economic war against US "enemies" which are all rich with oil reserves seems like the right aggressive maneuvers to make easy wins for the USA. On the other hand the World has changed since those times.

Current US foreign policy is aligned to impose maximum pressure on countries like Venezuela and Iran in order to pressure those governments and hopefully topple them with sanctions. The entire World is hungry for oil and the demand for oil is expanding at an exponential rate which in turn guides US foreign policy.

There is thousands of years of history of nations including the US to takeover the riches of nations and profit from the resources.

... ... ...

[May 01, 2019] India and Europe stopped buying iranian oil. 1 billion $ of iranian oil stays blocked in China, no one wants to touch it. Even Khamenei admitted that Europe left the JCPOA in practise.

Notable quotes:
"... The Empire is not weak, this is poor analysis. India and Europe stopped buying Iranian oil. 1 billion $ of Iranian oil stays blocked in China, no one wants to touch it. Even Khamenei admitted that Europe left the JCPOA in practice. ..."
"... Iran is in deep recession. Venezuela is in deep recession and is surrounded. ..."
"... Iraq? US troops are staying there. Syria? US troops are staying there long term. 1 third of the country containing the biggest oil fields is under US control. There is fuel shortage crisis due to sanctions. Europe is not stopping its sanctions either. ..."
May 01, 2019 | www.moonofalabama.org

Passer by , May 1, 2019 8:19:31 PM | link

"The Empire only appears to be strong. In reality it is weak, confused, clueless"

The Empire is not weak, this is poor analysis. India and Europe stopped buying Iranian oil. 1 billion $ of Iranian oil stays blocked in China, no one wants to touch it. Even Khamenei admitted that Europe left the JCPOA in practice.

Iran is in deep recession. Venezuela is in deep recession and is surrounded. Almost all of Latin America now has pro-US governments. CIA linked Bolsonaro took over in Brazil. Turkey is in deep recession and Erdogan lost the big cities.

India is moving closer to the US. Europe remains a vassal. Russian economic growth is weak. The US won the trade war against China as Andrei Martyanov himself admitted.

Iraq? US troops are staying there. Syria? US troops are staying there long term. 1 third of the country containing the biggest oil fields is under US control. There is fuel shortage crisis due to sanctions. Europe is not stopping its sanctions either.

There is no doubt that they will be weaker in the future, but they will fight hard to stop this and gain time.

[Apr 30, 2019] What Oil at $100 a Barrel Would Mean for the World Economy

Apr 30, 2019 | www.bloomberg.com

2. How can the world economy absorb oil at $100?

For a sustained hit to growth, economists say oil would need to hold above $100. It also depends on dollar strength or weakness, given crude is priced in greenbacks. Analysis by Oxford Economics found that Brent at $100 per barrel by the end of 2019 means the level of global gross domestic product would be 0.6 percent lower than currently projected by end-2020, with inflation on average 0.7 percentage points higher.

"We see increased risks of significantly higher oil prices," Oxford economists John Payne and Gabriel Sterne wrote in a note. "In the short-run, it is likely the supply impact will be offset by higher production elsewhere, but the market is tightening and all it would take is one more shock to supply and oil could reach $100."

3. How will Iran and Trump impact the market?

An upending of global oil trade around the Iran-Trump spat could continue to have a sizable impact on financial markets, as the affected supply is as much as 800,000 barrels a day. Uncertainties around availability have already whipsawed oil markets . And the political sensitivities of these developments have other markets bracing for volatility.

Trump has pledged to help, alongside Saudi Arabia and the U.A.E., those needing to shift orders from Iran to another supplier. But U.S. claims that its domestic supply can help offset the loss are a high bar to meet, given that the daily American output for similar crude is about a quarter of Iran's.

4. Who wins from higher oil prices?

Emerging economies dominate the list of oil-producing nations which is why they're affected more than developed ones. The increase in revenues will help to repair budgets and current account deficits, allowing governments to increase spending that will spur investment. Winners include Saudi Arabia, Russia, Norway, Nigeria and Ecuador according to analysis by Nomura.

5. Who loses?

Those emerging economies nursing current account and fiscal deficits run the risk of large capital outflows and weaker currencies, which in turn would spark inflation. That in turn will force governments and central banks to weigh up their options: hike interest rates even as growth slows or ride it out and risk capital flight. Nomura's losers list includes Turkey, Ukraine and India.

6. What does it mean for the world's biggest economy?

While U.S. oil producers try to take advantage of any sales boost from customers moving away from Iran, the broader U.S. economy won't necessarily see benefits with oil price tags as high as $100 a barrel.

It would be a squeeze on American consumers that are the backbone of still-steady economic growth . Prices at the gas pump already have risen more than 7 percent this month to $2.89 a gallon, which could weigh on retail sales that jumped in March by the most since 2017.

And if things go awry in global oil markets, there's risk that political blame shifts back to the U.S. for the sanctions, which could mean backlash via investment or other channels that threatens economic stability.

7. Will it lead to higher inflation around the world?

Because energy features prominently in consumer price gauges, policy makers look to core indexes that remove volatile components. If the run-up in prices proves to be substantial, and sustained, those costs will filter through to transportation and utilities.

8. What does it mean for central banks?

Led by the Federal Reserve, central banks around the world have taken a dovish tilt as the absence of inflation allows policy makers to shift their focus to slowing growth. That's unlikely to quickly change. The International Monetary Fund this month lowered its global growth forecast and said the world is in a "delicate moment."

-- With assistance by Sheela Tobben

[Apr 29, 2019] 'Hard to imagine' how global market will react when US waivers on Iran oil expire Putin

Notable quotes:
"... The waivers expire in May, meaning that those countries could potentially face US sanctions beyond that deadline. China and Turkey, on their part, have strongly condemned the American restrictions, arguing the US is not in a position to intervene in their trade ties with Iran. ..."
"... We don't have any information from our Saudi partners or other OPEC members that they are ready to pull out from the deal. ..."
"... He assured that Moscow is "fulfilling its commitments" to the production cuts agreed by OPEC and several non-OPEC producers in December. Saudi Arabia is also "unlikely" to withdraw, being the driving force behind the wider coalition. ..."
Apr 29, 2019 | www.rt.com

It's hard to foresee how US efforts to bring Iranian oil exports to zero will play out in future, Vladimir Putin admitted, saying OPEC members should live up to their obligation to keep output as low as possible if it comes true. Russia has an agreement with the Organization of the Petroleum Exporting Countries (OPEC) to cut their output by 1.2 million barrels per day, which remains in effect until July of this year, Putin said. But the US waivers – which gave a host of countries an exemption from the existing anti-Iran sanctions – expire much earlier, he reminded.

I don't imagine how the global energy market will react to that.

In November, the US re-imposed sanctions on Iran's energy, shipbuilding and banking sectors in a bid to deprive Tehran of its main sources of revenue. But it simultaneously issued waivers to China, India, Japan, South Korea, and Turkey – the main importers of Iranian crude – so that they can find alternative vendors of oil.

The waivers expire in May, meaning that those countries could potentially face US sanctions beyond that deadline. China and Turkey, on their part, have strongly condemned the American restrictions, arguing the US is not in a position to intervene in their trade ties with Iran.

Commenting on the issue, Putin said he hopes the market will eventually avoid the deficit of Iranian oil and that Iran will still be able to sell it. The comment came on the heels of conflicting reports that Donald Trump persuaded Riyadh to ramp up oil output this lowering fuel costs; these reports were denounced by OPEC officials.

Nevertheless, there is "no evidence" that any country is going to withdraw from the OPEC+ agreement to drop oil outputs, Putin said.

We don't have any information from our Saudi partners or other OPEC members that they are ready to pull out from the deal.

He assured that Moscow is "fulfilling its commitments" to the production cuts agreed by OPEC and several non-OPEC producers in December. Saudi Arabia is also "unlikely" to withdraw, being the driving force behind the wider coalition.

See also:

[Apr 28, 2019] US Sanctions Got India to Ditch Iran, Will Washington Get It to Ditch Russia Too - Global ResearchGlobal Research - Centre for by Andrew Korybko

So oil prices with rise which threaten Trump bid in 2020. Interesting times.
Notable quotes:
"... As is now known, however, appearances can be very misleading, and in actuality the same country that was vowing to "defy" the US actually ended up quietly implementing its new patron's will. ..."
Apr 24, 2019 | www.globalresearch.ca

The announcement by India's Oil Minister that his country will replace US-sanctioned Iranian oil imports with those from "major oil-producing countries" despite the dramatic Bollywood show that New Delhi has made up until this point out of "defying" US sanctions makes one seriously wonder whether India's preparing to ditch Russia next if the US imposes CAATSA sanctions against it over the S-400s.

Shattering The "Indian Illusion"

The " Indian Illusion " has been shattered after India's Oil Minister tweeted that his country will replace US-sanctioned Iranian oil imports with those from "major oil-producing countries" such as the Islamic Republic's hated GCC foes of Saudi Arabia and the UAE that America said will step up their exports in order to stabilize global prices after Washington announced that it won't renew its anti-Iranian oil sanction waivers. New Delhi made a dramatic Bollywood-like show over the past year out of "defying" US sanctions, with External Affairs Minister Sushma Swaraj announcing last May that India will only obey UNSC sanctions and not those unilaterally imposed by the US in contravention of international law.

The Oil Minister himself said back in October before the waivers were issued that India will continue buying Iranian oil in spite of the US sanctions, later crediting Prime Minister Modi a month later when the US eventually granted it the waiver. Adding "credibility" to the illusion that India's perception managers were masterfully creating, it was then reported that the country will use rupees instead of dollars when trading with Iran, a bold move that even fooled an RT columnist who headlined his op-ed on this development as a " response to US global bullying ".

As is now known, however, appearances can be very misleading, and in actuality the same country that was vowing to "defy" the US actually ended up quietly implementing its new patron's will.

[Apr 28, 2019] Rand think tank study suggest that the USA should flood the world with oil in order to overextend and unbalance Russia

Some pretty strange ideas if we are taking about oil. What they are smiling at RAND?
Notable quotes:
"... That evaluation is quite strange. The U.S. government does not produce oil. Private companies do so but only if they can make a profit. Increasing production beyond the global demand will decrease the oil price for all producers. All recent new U.S. production comes from shale oil. Optimistic estimates put the break even point for good shale oil fields at around $50 per barrel. Few fields can produce at lower costs. Most shale oil fields have a higher break even point. There is also a danger in suppressing oil prices. Many oil producing countries have U.S. friendly regimes. They need high oil prices to survive. Ruining them will not come cheap for the U.S. in geopolitical terms. ..."
"... of the 8 most promising suggestions - 6 of them are military... it seems to me these think tanks are great pr tools for the military industrial complex... who cares if the usa continues to move into 3rd world status as a nation, so long as more money for weapons can be acquired?? that is what these think tanks - rand and etc seem to want to foist on the public... it is all so very sad.. ..."
"... No, I think most US weapons procurement gives weapons that don't work as advertised, and wouldn't win wars anyway. I think it's one reason why the US military is largely only capable of spoiler wars, not actually conquering any place. (The other is the general unreliability of mercenary forces, which the US army basically is, however much they try to cultivate a militant Christian ethos.) ..."
"... I also do not believe spoiler wars help the country as a whole (as opposed to some of the owners) I think pretty much all a burden, immoral to boot and should be massively reduced. ..."
"... Even if you’re sure those companies are entirely private, if you print the current global reserve currency, can you not give “free” money to frackers and thereby make them more competitive than global peers? Sure, that’s flooding the market with an illegal subsidy. But, who can conduct proper accounting in opaque markets? ..."
Apr 28, 2019 | www.moonofalabama.org
According to RAND the best option to overextend and unbalance is to produce more oil:
Expanding U.S. energy production would stress Russia's economy, potentially constraining its government budget and, by extension, its defense spending. By adopting policies that expand world supply and depress global prices, the United States can limit Russian revenue. Doing so entails little cost or risk, produces second-order benefits for the U.S. economy, and does not need multilateral endorsement.

That evaluation is quite strange. The U.S. government does not produce oil. Private companies do so but only if they can make a profit. Increasing production beyond the global demand will decrease the oil price for all producers. All recent new U.S. production comes from shale oil. Optimistic estimates put the break even point for good shale oil fields at around $50 per barrel. Few fields can produce at lower costs. Most shale oil fields have a higher break even point. There is also a danger in suppressing oil prices. Many oil producing countries have U.S. friendly regimes. They need high oil prices to survive. Ruining them will not come cheap for the U.S. in geopolitical terms.

The second best option says RAND is to increase sanctions of Russia. This also doesn't make much sense. Russia can produce everything it needs and it has free access to the world's largest markets, China and India.

The best military options listed by RAND are all useless. All the new weapon systems Russia has revealed over the last two years are way more capable than anything the U.S. is able to field. If the U.S., as RAND advocates, invest more in certain fields, it will only be to catch up. That does not impose any new costs on Russia.

... ... ...

In all I find it a bit impertinent to publicly argue for "overextending and unbalancing Russia". Where is the need to do such?

The study demonstrates again that strategic analysis by U.S. think tanks is woefully shallow-minded. The "experts" writing these have no deep understanding of Russia, or even of the economic-political complexity of the real world.

Four of the eight best options the RAND study found start with the words "Invest more in ...". It is a sign that the foremost motive its writers had in mind is to grab more taxpayer money. Fine. Give it to them already. Overextending and unbalancing the U.S. by more abstruse expenditure for weapon systems that do not work will neither hurt me nor Russia.

james | Apr 27, 2019 2:34:51 PM | 2

thanks b.. of the 8 most promising suggestions - 6 of them are military... it seems to me these think tanks are great pr tools for the military industrial complex... who cares if the usa continues to move into 3rd world status as a nation, so long as more money for weapons can be acquired?? that is what these think tanks - rand and etc seem to want to foist on the public... it is all so very sad..

@1 steven.. well, as i read you, you are essentially supporting a continuation of the usa pouring endless money into the military then, regardless the accuracy of the accounts on the new Russian weapons.. do i have that right?

psychohistorian | Apr 27, 2019 2:42:19 PM | 3

@ b who wrote

"In all I find it a bit impertinent to publicly argue for "overextending and unbalancing Russia". Where is the need to do such?"

Russia is not beholden to the God of Mammon/global private finance world and the need to do such is to affect that position

The West is ruled by those that own private finance and all major conflict is predicated on the forceful, if necessary, maintenance of that control.

Steven T Johnson | Apr 27, 2019 2:47:15 PM | 4

james@2

No, I think most US weapons procurement gives weapons that don't work as advertised, and wouldn't win wars anyway. I think it's one reason why the US military is largely only capable of spoiler wars, not actually conquering any place. (The other is the general unreliability of mercenary forces, which the US army basically is, however much they try to cultivate a militant Christian ethos.)

However, since I also do not believe spoiler wars help the country as a whole (as opposed to some of the owners) I think pretty much all a burden, immoral to boot and should be massively reduced.

... ... ...

oglalla | Apr 27, 2019 5:34:07 PM | 18

>> The U.S. government does not produce oil. Private companies do so but only if they can make a profit. Increasing production beyond the global demand will decrease the oil price for all producers.

Even if you’re sure those companies are entirely private, if you print the current global reserve currency, can you not give “free” money to frackers and thereby make them more competitive than global peers? Sure, that’s flooding the market with an illegal subsidy. But, who can conduct proper accounting in opaque markets?

Of course, the money is not “free”. Depreciating the currency, an inflation tax, shows up in lower-quality goods (like frankenfood— we cannot afford healthy food any more) and higher prices in everything. But, again, who’s counting? The BLS and the media? Yep.

[Apr 28, 2019] Trump's Latest Iran Sanctions Show an Unraveling of US Foreign Policy

Apr 28, 2019 | therealnews.com

April 22, 2019

Col. Lawrence Wilkerson says unilateral sanctions against Iran are illegal, and show the ascendancy of John Bolton; they intensify tension with China and threaten our international position

https://www.youtube.com/embed/i0KTa2uSRro?rel=0&showinfo=0&enablejsapi=1

https://widget.spreaker.com/player?episode_id=17723879&theme=light&playlist=false&playlist-continuous=false&autoplay=false&live-autoplay=false&chapters-image=false&episode_image_position=right&hide-logo=true&hide-likes=true&hide-comments=true&hide-sharing=true&hide-download=false

The Trump administration is ramping up its campaign against Iran by announcing it will end waivers allowing eight countries to continue importing Iranian oil -- part of an attempt to drop Iranian oil exports to zero. This follows the Trump administration's categorization of part of Iran's army, the Islamic Revolutionary Guard, as a terrorist organization, and unilaterally withdrawing from the Iran nuclear deal.

"This administration, for all intents and purposes in my view, is working against the interests of the United States," Colonel Larry Wilkerson told The Real News Network's Marc Steiner. China and Turkey have already said they will not abide by the U.S. ending of the waivers, but India will possibly follow along, all of which could lead to a more profound trade war.

The decision also represents the influence of National Security Advisor John Bolton, who was in favor of these sanctions, while Secretary of State Mike Pompeo wanted the waivers to continue.

Steiner noted that the sanctions violate international law and asked whether this brings the U.S. closer to war with Iran, or if the sanctions are "in lieu of war." Wilkerson explained that John Bolton wants war even if Trump does not, and that regardless, these oil sanctions are "economic warfare" -- an especially risky international gamble.

"We're getting away with it [only] because we are the most powerful country in the world, economically, financially, and militarily," Wilkerson said. "That's not always going to be the case."

Wilkerson suspects that countries such as China, Russia, or India will eventually respond to U.S. sanctions with their own, or make an end-run around them.

"I think we're going to see other nations objecting in ways we can't really calculate right now," Wilkerson said. "And by that I mean we're going to have everything from the Chinese attempting to use other means of exchange than the dollar to the Chinese and the Russians perhaps working together to build an entirely separate and functional financial network that will eventually supplant that of the United States."

He told Steiner that it appears as though the U.S. is "suicidal," lacking any interest in diplomacy, and continuing to distance itself from its allies.

"We just lost badly in Syria, and we lost to a triumvirate of Syria under Bashar al-Assad, Russia, and Iran. Look at what happened, what has happened in Iraq. We lost a lot of men and women there. We shed blood and treasure there for an utterly ill-conceived invasion, but nonetheless we did. Now Iraq is more or less under the influence of Iran. The only ally we have in the region that we can count on at any time is an authoritarian, brutal state under a boy king who's losing one war on one flank and alienated Qatar on the other," Wilkerson said. "It's all falling apart. We're losing everywhere I look in the world, losing badly to that man in Moscow who picks up the pieces and you know, goes to Cuba when Marco Rubio decides he doesn't like Cuba, goes to Venezuela when we decide we might have an option for Venezuela that will include military force. Putin is the strategist in the world right now picking up on every piece we drop -- and we're dropping too many." Story Transcript MARC STEINER Welcome to The Real News Network. I'm Marc Steiner. Great to have you all with us. Trump is stepping up his campaign against Iran once again, announcing that he will end waivers that allowed eight countries to continue importing Iranian oil. He wants to drive Iranian oil exports to zero. All this comes on the heels of officially labeling the Revolutionary Guard as a terrorist organization and of course, forcing the U.S. to unilaterally pull out of the Iran Nuclear Deal. Well what course are we on? Are we inching toward a war with Iran? Are these intensified sanctions just an alternative to all-out war? How could the U.S. just unilaterally impose international sanctions? Doesn't that violate international law? Can he do it because the U.S. has a vital role in the international system of finance? Both Turkey and China have already announced they will not abide by Trump's unilateral declaration of sanctions. Does this intensify our trade war with China? We'll see. Joining us here at The Real News once again is Colonel Lawrence Wilkerson, who served as Chief-of-staff to U.S. Secretary of State Colin Powell, retired from U.S. Army, and is now Distinguished Adjunct Professor at the College of William and Mary where he teaches U.S. National Security. I welcome and good to have you back with us here on The Real News.

COL. LAWRENCE WILKERSON Good to be back again.

MARC STEINER So before we start, let's run this short piece by Secretary of State Mike Pompeo and what he had to say about the intensifying of sanctions.

MIKE POMPEO Today I am announcing that we will no longer grant any exemptions. We're going to zero, going to zero across the board. We will continue to enforce sanctions and monitor compliance. Any nation or entity interacting with Iran should due it's diligence and err on the side of caution. The risks are simply not going to be worth the benefits. We've made our demands very clear to the Ayatollah and his cronies: end your pursuit of nuclear weapons, stop testing and proliferating ballistic missiles, stop sponsoring and committing terrorism, halt the arbitrary detention of U.S. citizens. Our pressure is aimed at fulfilling these demands and others and I will continue to accelerate until Iran is willing to address them at the negotiating table.

MARC STEINER So what's your instant analysis of what we've just seen here, what we're seeing, Larry?

COL. LAWRENCE WILKERSON First, the dispute within the administration -- much ballyhooed between Bolton and Pompeo and Brian Hook, Pompeo's main man on Iran -- is apparently over and Bolton won. Pompeo and Brian Hook were not in favor of going all the way on oil sanctions. They were in favor of continuing the waivers for countries like China and India, and so forth. So that means Bolton's won. That's an ominous victory in my mind. More ominous was Bolton and Pompeo and Pompeo in particular's testimony to the Congress about the "connections between al-Qaeda and Iran." I've been there done that. I remember when George Tenet very forcefully and powerfully in late January-early February of 2003, pointed out to Colin Powell who had just said, toss that stuff out of my presentation to the United Nations. It stinks. That stuff being, connections between al-Qaeda and Baghdad over 9/11. Pompeo essentially said to Rand Paul in questioning him in the Senate and elsewhere, that there were connections between al-Qaeda and Iran, and implied that those connections gave the president the right to go to war with Iran without having to go to the Congress of the United States. In other words, the original A.U.M.F. authorization for the use of military force issued after 9/11, pertained some seventeen to eighteen years later to Iran.

MARC STEINER And that's where you skin yourself. Most people who know this arena, know that area, the contradiction of saying Iran and al-Qaeda are one or are working with one another, just on its face doesn't make any sense.

COL. LAWRENCE WILKERSON Nonsense just as it was with Saddam Hussein. We all know now, but it was a very powerful thing for Colin Powell to tell the U.N. Security Council and even more powerful for him to tell the American people that. And that's what Trump and Bolton and Pompeo now are trying to duplicate: another specious case for war.

MARC STEINER So do you think -- speaking of that -- are we inching our way towards war with Iran, or do you think what we're seeing, these sanctions, are actually in lieu of war? What do you think the dynamic is here?

COL. LAWRENCE WILKERSON I don't think Trump wants war, but I know John Bolton does. So I have to imagine that there is going to be a come to Jesus meeting or some such resolution with Donald Trump if Bolton persists in wanting to use military force and Donald Trump doesn't. On the side of all of this, is Trump's new partner in crime, Bibi Netanyahu. We don't know what Bibi promised Donald Trump when Donald Trump weighed in on Bibi's election. I'm told by people who know these sorts of things in Israel, that had Trump not weighed in heavily for Bibi, that he might not have won, that it might have been a lot closer that it was, and it was pretty close anyway. So I don't know what Bibi promised Trump in return. It might be that he conducts whatever military operation is conducted with respect to Iran. Anything's possible here with these two characters.

MARC STEINER But the whole Bibi question is something we've spent a half-an-hour, hours just talking about what that relationship is, and who's driving whose foreign policy when it comes to Iran especially.

COL. LAWRENCE WILKERSON Yes. Gideon Levy in Haaretz was right when he said U.S.-Middle East policy is not made in Washington. It's made, he said Tel Aviv, but now he would say Jerusalem.

MARC STEINER So let me ask you another question. How can the United States just unilaterally impose international sanctions? I thought that's something the Security Council would have to do and people are writing this as a violation of international law. So from your perch when you were the Secretary of State and now, how does that play into all this?

COL. LAWRENCE WILKERSON I think it plays very dangerously. We are becoming -- through our manipulation of the Swiss system and other means in the world for financial transactions -- a pariah in the world. Very much despised and even hated in the world and increasingly, by our own friends and allies like Germany, France, Britain, and so forth. This manipulation of this system that we largely set up for tracking terrorist monies and so forth, has been turned into a very sophisticated weapon. It's economic warfare in anybody's book and the only reason we're getting away from it, you just hinted at. We're getting away with it because we are the most powerful country in the world -- economically, financially, and militarily. That's not always going to be the case and I suspect there are going to people like China, like Russia, like India, like other countries in the world, finally getting tired of this and start reciprocating and building other systems to go around ours.

MARC STEINER Stepping up the sanctions against Iran and saying nobody can buy any oil from Iran at all, zeroing them out -- China and Turkey have already said we're not abiding by this. You can't tell us how to run our economy and what we're doing. India is caught between a rock and a hard place. They don't want to go with this. Ten percent of their crude oil comes from Iran, but they're in a tough bind given who finances them as well. So how is this going to play out? This can lead to greater trade wars between China and the U.S. How do you see this all tumbling out, both in terms of Iran and our relationship with those other nations?

COL. LAWRENCE WILKERSON I think we're going to see other nations objecting in ways that we can't really calculate right now. By that I mean, we're going to have everything from the Chinese attempting to use other means of exchange than the dollar, to the Chinese and the Russians perhaps working together to build an entirely separate and functional financial network that will eventually supplant that of the United States. So this has enormous potential for backfiring, just like all the enemies we are creating in the world right now and the allies that we're distancing ourselves from. These are not positive moves by the United States. If I were on Mars looking down at the United States right now, and I were some wise Martian statesmen, and I was trying to figure out what the United States -- the current hegemon of the world -- was trying to do, I would think we were trying to commit suicide. It's as if we do not have any means of doing anything diplomatically or otherwise, that doesn't rebound to our discredit. Look at what's happened. We just lost badly in Syria and we lost to a triumvirate of Syria under Bashar al-Assad, Russia, and Iran. Look at what has happened in Iraq. We lost a lot of men and women there. We shed blood and treasure there for an utterly ill-conceived invasion, but nonetheless we did. Now Iraq is more or less under the influence of Iran. The only ally we have in the region that we can count on at any time is an authoritarian, brutal state under a boy-king who's losing one war on one flank, and alienated Qatar on the other. Our latest NATO in the Middle East just lost its most formidable partner, Egypt. It's all falling apart. We're losing everywhere I look in the world and losing badly to that man in Moscow who picks up the pieces and goes to Cuba when Marco Rubio decides he doesn't like Cuba. He goes to Venezuela when we decide we might have an option for Venezuela that would include military force. Putin is the strategist in the world right now, picking up on every piece we drop, and we're dropping too many.

MARC STEINER So very quickly here before we run out of time, one quick question. If you were sitting in the halls of power at this moment, and your job is Chief-of-staff or the Secretary of State, I'm curious what you would be saying to a president that said we have to do this. What would you say is the alternative? What would you be saying at this moment?

COL. LAWRENCE WILKERSON Which one do you want to pick? [laughter] Kim Jong-un is going to fire a ballistic missile or he's going to do a nuclear test or both sometime around Christmas.

MARC STEINER Right.

COL. LAWRENCE WILKERSON This administration for all intents and purposes, in my view, is working against the interests of the United States. So the first thing I would do is sit down and say, Mr. President, please before I walk out of here and go back to Foggy Bottom and retire from my position because you are going to fire me, I want to know what you think the national interests of the United States are. You said you were going to "make America great again." You are destroying America. You said you were going to bring jobs back. You have only brought the jobs back that the last three years of the Obama administration generated, because no president ever generates them instantly. So you haven't done anything yet that looks like it's in the interest of the United States and you've done a whole load of things that are clearly not in our interest, not the least of which is to drive our allies away and make many enemies whom you said all options are on the table confronting. Please, Mr. President. Tell me what you think our interests are.

MARC STEINER And with that, I want to say thank you once again. Colonel Larry Wilkerson, always a pleasure to have you here at The Real News. And thanks so much for your thoughts and wisdom.

COL. LAWRENCE WILKERSON Thank you.

MARC STEINER And I'm Marc Steiner here for The Real News Network. Thank you all for joining us. Take care.

[Apr 27, 2019] Trump Drops The Other Iran Oil Shoe

Notable quotes:
"... Bolton says that this is all designed to make Iran be a "normal country," as if Saudi Arabia were such. ..."
Apr 27, 2019 | angrybearblog.com

Indeed, this looks like a potentially much more dangerous situation. If these major nations obey Trump (I suspect some will not), Iran might be tempted to take more aggressive action, with blocking the Straits of Hormuz among the more serious. This would really spike the price of oil, and quite possibly trigger a war. This may be what the Trump people want, with their real policy apparently being "regime change." However, so far the only regime change seems to be rising influence of hardliners, with a new hardline commander for the now sanctioned Revolutionary Guards being appointed. He has been talking about missiles getting fired on Israel from Lebanon by Hezbollah. Is this what Netanyahu really wants?

I think those who think the Iranian regime will easily be overthrown are more deluded than those who advocated invading Iraq (and some of them are the same people, see John Bolton especially). This has the potential of really seriously distracting people from the Mueller Report, but not at all in a good way.

... ... ...

Another Addendum: In WaPo this morning they report that the other three nations are Greece, Italy, and Taiwan, and that they have already stopped buying Iranian oil under US pressure. Also, apparently Japan has been stockpiling oil from there and has stopped further purchases already in anticipation of just this move by the US. OTOH, both China and Turkey are talking about not obeying the US order. No word out of either India or South Korea so far.

Bolton says that this is all designed to make Iran be a "normal country," as if Saudi Arabia were such. As it is, indeed the hawkish new leader of the Iranian Revolutionary Guards has spoken publicly of possibly blocking the Straits of Hormuz, as I suggested they may well be contemplating.

[Apr 27, 2019] Fundamental news moving paper oil market: Trump said something

Apr 27, 2019 | peakoilbarrel.com

Eulenspiegel x Ignored says: 04/26/2019 at 9:52 am

The oil price is falling hard today.

Is there any news, Trump giving waivers or some new source of oil available?

Ok, found it.
Fundamental news: Trump said something:
https://www.zerohedge.com/news/2019-04-26/oil-tumbles-after-trump-says-he-called-opec-gas-prices-are-coming-down

So we get 40$ oil soon ;).

Energy News x Ignored says: 04/26/2019 at 10:03 am
It seems President Trump called on OPEC to bring down oil prices
Reuters headline https://pbs.twimg.com/media/D5FZA8VW4AA6QNI.png
GuyM x Ignored says: 04/26/2019 at 11:52 am
I can't imagine that moron influencing much.
ProPoly x Ignored says: 04/26/2019 at 3:47 pm
It can manipulate short term trading because that's driven by headline reading computers and other algos. Anything longer than that, talking price doesn't work if there's a serious supply or demand issue. It's a near-zero elasticity industrial commodity.
Ron Patterson x Ignored says: 04/26/2019 at 12:03 pm
He called OPEC? Just whom at OPEC did he speak with? OPEC is a group of oil exporting nations. They meet once every six months or so to decide what they will do, if anything.
No one can just call OPEC and OPEC will decide to produce more oil. They have to meet, talk it over, and decide what to do.
Iron Mike x Ignored says: 04/26/2019 at 12:35 pm
Trump probably just called his employer .AIPAC.

[Apr 27, 2019] Damn, and all along I thought Trump got the credit. Just pay attention to how fast the ship is sinking.

Apr 27, 2019 | peakoilbarrel.com

Ron Patterson x Ignored says: 04/26/2019 at 8:05 pm

Oil price recedes after 'knee-jerk' reaction to Russian suspensions

The price of oil slipped on Friday, more than offsetting Thursday's gains on a "knee-jerk" reaction to the suspension of some Russian exports on quality concerns.

Brent crude, the international oil benchmark, on Thursday rose above $75 a barrel for the first time in six months as Germany and Poland halted imports from Russia because of contamination in the Druzhba pipeline.

But analysts said the market had over reacted and Brent pared its gains later in the day, with the slip in price continuing into Friday as the marker fell 1.3 per cent to $73.39.

"Fears of a supply shock were greatly exaggerated," said Stephen Brennock, an analyst at PVM. "After all, refineries usually hold ample crude stockpiles to guard against such disruptions. Little wonder then that the initial knee-jerk price reaction petered out."

Damn, and all along I thought Trump got the credit. :-)

GuyM x Ignored says: 04/26/2019 at 8:53 pm
Well, I wouldn't classify the loss of one million barrels a day as exactly a knee jerk reaction. We are supposed to have a 1.3 million barrel a day increase in demand. Ok, that's 2.3 more we need. Oops, US can't supply that, Canada is down, and Brazil and Argentina will be essentially flat. Oh, oh, we need to add another 600k loss from Venezuela, and probably another million from Iran, making about 3.9 million more needed. Other depletion .3 to .6 million? Spare capacity from OPEC is 3 million? Or, that's the fairy tale. Yeah, it's ok to dream.

Just pay attention to how fast the ship is sinking.

[Apr 25, 2019] Paper oil and QE

Apr 25, 2019 | off-guardian.org

BigB says Apr, 24, 2019

Overproduction of capital – seeking a high, no risk return – is a certainty. Especially with continuing QE. There is no end game now. That capital will find its way into derivative casino capital gambling – of which only 2% ends up as a commodity changing hands. The rest is hidden toxic exposure making the banking system untenable. Other outlets include mergers and acquisitions (toward oligopolies of power); leveraged buyouts; and asset stripping destroying any last real productive capacity for short term 'Global Death Protocol' (GDP returns – one of the sensible points Monbiot made it is no substitute Human Development Index). Pension fund raiding: there is thought to be a $30 tn black hole already – now they want to release $90tn 'locked assets' without even the slightest chance of ever getting an ROI. Overproduced capital will also find its way in to the tech bubble – funding our AI-redundancy. Oil-rent, commodity-rent, bio-pharma-rent, agi-rent, and tech-rent seems to be a major part of the capitalist death throes. But you cannot rent a host humanity by making them redundant. Now they also want to rent nature back to us. Add in spiralling exponential debt; EROI and a slow-burn falling net-energy crisis; and authoritarian states merging with bureaucratised corporate capital down to the local infrastructure level its humanity versus corporate state insanity.

And the bleated hope of sheep is that a nativist leader – like Jeremy Corbyn – will come along and save us. Reality is going to have to hit the majoritarian massif really hard in the face to wake people up to the systemic fragility of globalised capitalism. Unfortunately, its internecine internal contradictions may prove fatal before that. My hope is that something better may rise from the ashes: a humanist society contra all the fatal contradictions of relentless coercive capital accumulation. Given the level of political and ecological acumen we encounter on a daily basis I'm presently not too optimistic. But that can change, rapidly. Consciousness is not timebound or limited by causality (see below). Now! would be a good time for a consciousness evolutionary explosion a Big Bang of a new reality. Depending on what the Big Bang of the old leaves intact! There will be a solution. It might not be optimal though. I presently can't see any smooth transition taking place. Carpe deum and enjoy the ride over the ever quickening rapids of the net energy falls!

[Apr 25, 2019] Pepe's item mentions the $2.5 Quadrillion of derivatives "would start a chain reaction of destruction" in response to rapid spikes in oil price

Apr 25, 2019 | www.moonofalabama.org

karlof1 , Apr 24, 2019 1:55:28 PM | link

Pepe's item mentions the $2.5 Quadrillion of derivatives "would start a chain reaction of destruction" in response to rapid spikes in oil price that per previous discussions would rebound asymmetrically onto Outlaw US Empire and generate a massive crisis far worse than soaring gasoline prices as that would constitute a direct hit on Deep State interests and it would take casualties for the first time.

Oh, 100K Tons of "diplomacy" boast/threat made by the Empire's ambassador to Russia:

"Diplomatic communication and dialogue coupled with the strong defence these ships provide demonstrate to Russia that if it truly seeks better relations with the United States, it must cease its destabilising activities around the world."

Two Imperial carrier groups are now in the Med offering themselves as juicy targets. Huntsman's bluff and buster is yet another example of Pompeo's idiocy. I thought the RT headline "Mask off? US ambassador to Russia says US practices diplomacy with aircraft carriers" more appropriate for its item about Huntsman's hubris.

A check of San Francisco gas prices via GasBuddy shows a very broad range from $3.99-4.59/gal, while here in Oregon it's @3.25; and at Refinery Central--Houston--it's not over $3/gal yet. So, there's a ways to go before the pain threshold is reached nationally.

Today marks day 2 for the 8th annual Moscow Conference on International Security whose "main topic" this year focuses on Middle East Issues , which will certainly include the undeclared hybrid war between Iran and the Outlaw US Empire. Hopefully we will get some reporting on the discussions taking place there. Shoigu spoke yesterday, while Lavrov speaks today.


karlof1 , Apr 24, 2019 2:29:03 PM | link

In a related development, the Parliamentary Baghdad Summit had its one day and reportedly didn't accomplish much aside from getting former adversaries together in the same room. I'm hopeful of finding a more detailed report. That most of the GCC wasn't invited seems to be due to the Summit's theme being Iraqi neighbors. One might have expected either Iran or Saudi to not send a representative given past/current enmity, but both attended and didn't attack each other. That Saudi and UAE sent flood relief aid to Iran is a very good sign that the Umma is finally reforming to deal with its primary enemies--Zionistan and the Outlaw US Empire. Of course, in any armed conflict between Iran and the Empire, being on better terms with GCC and Saudi will be important--there'll be no coalition of the bullied and bribed Arab NATO.

What I'm seeing is Iran gaining more regional allies at the expense of the Outlaw US Empire. The just concluded visit of Pakistan PM Khan to Iran is a major case in point as is the détente between Iran and Qatar. And continued flack targeting Saudi within the US Congress is certainly affecting King Salman's viewpoints. Blowback from previous Imperial hubris initiated by Bolton and Pompeo's CIA predecessors is working against their policy goals. IMO, the "waiver holders" are unlikely to waver as there're no market substitutes for Iranian oil. If they get targeted too, then an escalation in blowback will occur as every Outlaw US Empire move is illegal and immoral.

Variance Doc , Apr 24, 2019 4:42:24 PM | link
@ karlof1 | Apr 24, 2019 2:29:03 PM | 48

Most of the of the amateurs reporting "derivative amounts" are stated in notional values, which is wrong (Love Pepe's work, but he is not a financial economist.) It's the offset value (not including counter-party amounts) that matter and it's far less than notional. So, no end of the world hysteria needed.

Also, it's marginal price of gas relative to a person's balance sheet that matters. I think that's what b is referring to. In english, most people have a fixed monthly income and gas is a big chunk of expenses (for those who actually work). A gas price increase of $0.25 or more means that they have to reduce expenses somewhere else (unlikely since 'mericans love their lifestyles) or go further into debt, which means they pull-forward future consumption. That's what partly causes the slowing of economic future activity. That is ONE reason this extended (FED) monetary policy is so destructive to the real economy.

[Apr 24, 2019] Is case of US Iran sanctions China has a very difficult dilemma

Apr 24, 2019 | www.moonofalabama.org

Schmoe , Apr 24, 2019 7:20:33 PM | link

China has quite a dilemna:

a) violate sanctions and risk severe penalties; or

b) go along with sanctions but if Iran pulls the pin on the world economy, China could very well completely crash economically, to the point that I wonder if there could be a revolution. Also, everyone knows about China's Muslim issues, Iran could say "it would be shame if someone armed those tens of million of Muslims you have".

I don't envy their position.

karlof1 , Apr 24, 2019 7:21:01 PM | link

Iranian Foreign Minister Mohammad Zarif has conducted an interview with Reuters saying Trump didn't want war but could be "lured into one." As usual, Reuters doesn't just provide a transcript of the interview, only publishing what it wants to publish. We'll need to await the official Iranian transcript to note what else was said and what was reported out-of-context.
karlof1 , Apr 24, 2019 7:30:49 PM | link
Schmoe @69--

China will ignore the illegal Outlaw US Empire diktat and carry on as before. If it's challenged, it has the means to defend itself and will. The Empire is beholden to China not the other way-round.

[Apr 24, 2019] The big fish are China and India. Those are the major users of iranian oil, and neither of them is likely to desist

Apr 24, 2019 | www.moonofalabama.org

nervos belli , Apr 24, 2019 1:17:03 PM | link

@39
Nobody cares what Italy and Greece need. They are good little vassals and will do what told. Turkey is of course a bigger problem, but might just be mostly overlooked and ignored.

The big fish are China and India. Those are the major users of iranian oil, and neither of them is likely to desist. What will the US do with them? Not possiple to financially sanction China.

That's why I think there will be lots of talk, but no action against anyone still buying iranian oil. Especially since Venezuela is not resolved. Nobody, not even the US, intends to march into Venezuela to "liberate" any oil wells any time soon.
While Maduro might some day collapse under his camarilla's corruption and his own incompetence, it will take a long time, probably years. Especially the opposition against him is similary incompetent. My guess is, it will take longer than Trump will be in office.

[Apr 24, 2019] Secretary of State Mike Pompeo and National Security Advisor John Bolton have vowed to strangle Iran and cut off all oil exports.

Apr 24, 2019 | www.unz.com

Agent76 , says: April 23, 2019 at 10:26 pm GMT

Apr 23, 2019 Pompeo Finally Tells The Truth: 'We Lie, We Cheat, We Steal'

Secretary of State Mike Pompeo and National Security Advisor John Bolton have vowed to strangle Iran and cut off all oil exports.

[Apr 24, 2019] As Oil Prices Rise on End of Iran Waivers, Trump Aide Vows Oil Prices Won't Rise

Kudlow always looks to me like cocaine infused idiot. Not a bad showman though.
Apr 24, 2019 | news.antiwar.com

One would think hindsight would be 20:20 on the US ending Iran oil waivers on Monday and the surging price of oil in the first 48 hours since that happened. The Trump Administration remains upbeat, however, and confident that what clearly just happened won't happen.

Trump economic adviser Larry Kudlow made comments Tuesday at the National Press Club, comments which again came two days after the announcement, and after two days of prices going up substantially, assuring that there would be no price increase.

"I don't see any palpable impact. The world is awash with oil," Kudlow told the audience. That clearly appears to have been the administration's rationale, with several officials emphasizing the excess oil on the market before this move was ultimately made.

Their math was a bit off though. Estimates of tens of thousands of additional barrels of oil supply being available were slammed headlong into a US move that aimed to stop Iran's roughly one million barrels of daily oil sales. This has already lead to a rush on the market, with nations trying to secure supply while they can, and at higher prices.

All of this was well predictable. Indeed, financial outlets had already predicted that the administration would have to keep the waivers program going specifically because they couldn't afford this increase in global prices. Instead, they deluded themselves into thinking it wouldn't happen, and when it did, continued to maintain that it didn't, or wouldn't.

[Apr 24, 2019] Trump: Stop buying Iranian oil or face sanctions

Apr 23, 2019 | www.youtube.com

Oil prices are on the rise after the United States announced a new crackdown on Iran's oil exports aiming to reduce them to zero.
Iran's threatening retaliation by blocking the Strait of Hormuz - the world's lifeline of oil from all Gulf countries, including Saudi Arabia, Kuwait and Iraq.
The move has


K kaye , 10 hours ago

Can we sanction food from Pompeo? Looks like his jacket about to burst open...

noshadova , 11 hours ago

Why would the whole world be afraid of USA ? Ans. Greed and lack of integrity by the leaders !

Randy Pederson , 4 hours ago

The US are the only ones that are currently bombing multiple countries at the same time with no declaration of war.

SA SHA , 11 hours ago

Economic Sanctions === Economic Terrorist Attack Recent terrorist attacks indicate that the United States is using extremist organizations to provoke religious wars. The aim is to split Eurasia and make troubles for Europe. The United States is very afraid of peace in Eurasia, because it will make the United States a third world country.

[Apr 24, 2019] Trump: Stop buying Iranian oil or face sanctions Inside Story

Apr 23, 2019 | www.youtube.com

Oil prices are on the rise after the United States announced a new crackdown on Iran's oil exports aiming to reduce them to zero.
Iran's threatening retaliation by blocking the Strait of Hormuz - the world's lifeline of oil from all Gulf countries, including Saudi Arabia, Kuwait and Iraq.
The move has

[Apr 23, 2019] Mapping The Countries With The Most Oil Reserves

Apr 23, 2019 | www.zerohedge.com

1969wasgood , 38 minutes ago link

What it really means. 42 more years, and it's gone. 1.531 trillion bbls divided by a no grow of 100 million bbls consumption a day, simple math. And we rant about finding another 50 billion bbls. That only takes the total of the recoverable oil to 1.581 trillion bbls.

Oil will leave us before we leave oil. We are heading for mass starvation. There are no electric fire engines, there are no electric ambulances, there are no electric farm machinery, there are no electric military machinery, there are no electric boats or ships or ferries, there are no electric airplanes, fighter jets, helicopters, there are 1.4 billion cars in the world of which 3 million are electric, if Tesla quadruples production it couldn't replace the gas and diesel powered vehicles in 1200 years, and the Chinese electrics are crap.

deFLorable hillbilly , 1 hour ago link

This map is complete BS. No one, especially some spy agency, knows how much of anything is underground.

The only known fact is current production. "Known Reserves" is a hopelessly politicized exercise in conjecture, primarily for the purpose of securitizing international loans at favorable rates.

Yen Cross , 1 hour ago link

These numbers are complete horse-****.

U.S. Crude Oil, Natural Gas, and Natural Gas Proved Reserves, Year-end 2017

Proved reserves of crude oil in the United States increased 19.5% (6.4 billion barrels) to 39.2 billion barrels at Year-End 2017, setting a new U.S. record for crude oil proved reserves. The previous record was 39.0 billion barrels set in 1970.

USGS Announces Largest Oil And Gas Deposit Ever Assessed In U.S. : The Two-Way : NPR

The USGS says all 20 billion barrels of oil are "technically recoverable," meaning the oil could be brought to the surface "using currently available technology and industry practices."

Between the corrupt politicians, and oil execs. these morons can't even concoct a decent lie anymore.

Minamoto , 1 hour ago link

Those numbers are somewhat laughable... Venezuela's gigantic reserves require lots of processing to get the oil sands into proper crude.

In addition, Russia's total reserves are underestimated as most of Russia's territory has not been geologically explored.

bismillah , 1 hour ago link

Most oil reserve claims with OPEC countries are hugely exaggerated.

And reserve claims by others are faked higher than they really are, too.

[Apr 16, 2019] The incompetent, the corrupt, the treacherous -- not just walking free, but with reputations intact, fat bank balances, and flourishing careers. Now they re angling for war with Iran.

Highly recommended!
Apr 15, 2019 | www.theamericanconservative.com

Return of the Just April 14, 2019 at 10:46 am

You're right. I see people like Robert Kagan's opinions being respectfully asked on foreign affairs, John Bolton and Elliott Abrams being hired to direct our foreign policy.

The incompetent, the corrupt, the treacherous -- not just walking free, but with reputations intact, fat bank balances, and flourishing careers. Now they're angling for war with Iran.

It's preposterous and sickening. And it can't be allowed to stand, so you can't just stand off and say you're "wrecked". Keep fighting, as you're doing. I will fight it until I can't fight anymore.

Ken Zaretzke , says: April 14, 2019 at 3:38 pm
Fact-bedeviled JohnT: “McCain was a problem for this nation? Sweet Jesus! There quite simply is no rational adult on the planet who buys that nonsense.”

McCain had close ties to the military-industrial complex. He was a backer of post-Cold War NATO. He was a neoconservative darling. He never heard of a dictator that he didn’t want to depose with boots on the ground, with the possible exception of various Saudi dictators (the oil-weaponry-torture nexus). He promoted pseudo-accountability of government in campaign finance but blocked accountability for the Pentagon and State Department when he co-chaired the United States Senate Select Committee on POW/MIA Affairs with John Kerry.

And, perhaps partly because of the head trauma and/or emotional wounds he suffered at the hands of Chinese-backed Commies, it’s plausible to think he was regarded by the willy-nilly plotters of the deep state as a manipulable, and thus useful, conduit of domestic subversion via the bogus Steele dossier.

Unfortunately, the episode that most defines McCain’s life is the very last one–his being a pawn of M-16 in the the deep state’s years-long attempt to derail the presidency of Donald Trump.

Joe Dokes , says: April 14, 2019 at 11:55 pm
Measuring success means determining goals. The goals of most wars is to enrich the people in charge. So, by this metric, the war was a success. The rest of it is just props and propaganda.
Andrew Stergiou , says: April 15, 2019 at 5:11 am
“Pyrrhic Victory” look it up the Roman Empire Won but lost if the US is invaded and the government does not defend it I would like to start my own defense: But the knee jerk politics that stirs America’s cannon fodder citizens is a painful reminder of a history of jingoist lies where at times some left and right agree at least for a short moment before the rich and powerful push their weight to have their way.

If All politics is relative Right wingers are the the left of what? Nuclear destruction? or Slavery?

Peter Smith , says: April 15, 2019 at 5:13 am
My goodness! I am also a veteran, but of the Vietnam war, and my father was a career officer from 1939-1961 as a paratrooper first, and later as an intelligence officer. He argued vigorously against our Vietnam involvement, and was cashiered for his intellectual honesty. A combat veteran’s views are meaningless when the political winds are blowing.

Simply put, we have killed thousands of our kids in service of the colonial empires left to us by the British and the French after WWII. More practice at incompetent strategies and tactics does not make us more competent–it merely extends the blunders and pain; viz the French for two CENTURIES against the Britsh during the battles over Normandy while the Planagenet kings worked to hold their viking-won inheritance.

At least then, kings risked their own lives. Generals fight because the LIKE it…a lot. Prior failures are only practice to the, regardless of the cost in lives of the kids we tried to raise well, and who were slaughtered for no gain.

We don’t need the empire, and we certainly shouldn’t fight for the corrupt businessmen who have profited from the never-ending conflicts. Let’s spend those trillions at home, so long as we also police our government to keep both Democrat and Republican politicians from feathering their own nests. Term limits and prosecutions will help us, but only if we are vigilant. Wars distract our attention while corruption is rampant at home.

Fayez Abedaziz , says: April 12, 2019 at 12:25 am
Thanks, I appreciate this article.
I’ll make two points, my own opinion:
it’s the same story as Vietnam, the bull about how the politicians or anti-war demonstrators tied the military ‘hand,’ blah, blah.
Nonsense. Invading a nation and slaughtering people in their towns, houses…gee…what’s wrong with that, eh?
The average American has a primitive mind when it comes to such matters.
Second point I have, is that both Bushes, Clinton, Obama, Hillary and Trump should be dragged to a world court, given a fair trial and locked up for life with hard labor… oh, and Cheney too,for all those families, in half a dozen nations, especially the children overseas that suffered/died from these creeps.
And, the families of dead or maimed American troops should be apologized to and compensation paid by several million dollars to each.
The people I named above make me sick, because I have feelings and a conscience. Can you dig?
kingdomofgodflag.info , says: April 12, 2019 at 8:19 am
Though there is a worldly justification for killing to obtain or maintain freedoms, there is no Christian justification for it. Which suggests that Christians who die while doing it, die in vain.

America’s wars are prosecuted by a military that includes Christians. They seldom question the killing their country orders them to do, as though the will of the government is that of the will of God. Is that a safe assumption for them to make? German Christian soldiers made that assumption regarding their government in 1939. Who was there to tell them otherwise? The Church failed, including the chaplains. (The Southern Baptist Convention declared the invasion of Iraq a just war in 2003.) These wars need to be assessed by Just War criteria. Christian soldiers need to know when to exercise selective conscientious objection, for it is better to go to prison than to kill without God’s approval. If Just War theory is irrelevant, the default response is Christian Pacifism.

Mark Thomason , says: April 12, 2019 at 10:43 am
“has gone un-investigated, unheard of, or unpunished.”

The one guy who did tell us has just been arrested for doing exactly that.

The arrest is cheered by those who fantasize about Russiagate, but it is expressly FOR telling us about these things.

Stephen J. , says: April 12, 2019 at 10:51 am
“Iraq Wrecked” a lot of innocent people. Millions are dead, cities reduced to rubble, homes and businesses destroyed and it was all a damned lie. And the perpetrators are Free.
Now there is sectarian violence too, where once there was a semblance of harmony amongst various denominations. See article link below.

“Are The Christians Slaughtered in The Middle East Victims of the Actions of Western War Criminals and Their Terrorist Supporting NATO ‘Allies’”?

http://graysinfo.blogspot.com/2017/04/are-christians-slaughtered-in-middle.html

the the , says: April 12, 2019 at 11:53 am
We are a globalist open borders and mass immigration nation. We stand for nothing. To serve in this nation’s military is very stupid. You aren’t defending anything. You are just a tool of globalism. Again, we don’t secure our borders. That’s a very big give away to what’s going on.
the the , says: April 12, 2019 at 11:57 am
If our nation’s military really was an American military concerned with our security we would have secured our border after 9/11, reduced all immigration, deported ALL muslims, and that’s it. Just secure the borders and expel Muslims! That’s all we needed to do.

Instead we killed so many people and imported many many more Muslims! And we call this compassion. Its insane.

Kouros , says: April 12, 2019 at 12:02 pm
Maybe if Talibans get back in power they will destroy the opium. You know, like they did when they were first in power…. It seems that wherever Americans get involved, drugs follow…
JohnT , says: April 12, 2019 at 2:03 pm
“Yet, we must not fail to comprehend its grave implications. Our toil, resources, and livelihood are all involved. So is the very structure of our society. In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex.” In Eisenhower’s televised farewell address January 17, 1961.
Rational thought would lead one to believe such words from a fellow with his credentials would have had a useful effect. But it didn’t. In point of fact, in the likes of Eric Prince and his supporters the notion of war as a profit center is quite literally a family affair.
Ken Zaretzke , says: April 12, 2019 at 2:10 pm
The military-industrial complex couldn’t accomplish this all by its lonesome self. The deep state was doing its thing. The two things overlap but aren’t the same. The deep state is not only or mainly about business profits, but about power. Power in the world means empire, which requires a military-industrial complex but is not reducible to it.

We now have a rare opportunity to unveil the workings of the deep state, but it will require a special counsel, and a lengthy written report, on the doings in the 2016 election of the FBI (Comey, Strzok, et. al.), and collaterally the CIA and DIA (Brennan and Clapper). Also the British government (M-16), John McCain, and maybe Bush and Obama judges on the FISA courts.

[Apr 15, 2019] Sour crude became more expensive, because it has higher energy content and more opetimal mix of various hydrocarbons for refining

Notable quotes:
"... As the supply-side structure has changed, the spread between sour and the historically far more expensive light, sweet crude has thinned and even flipped in some instances. ..."
"... "All refiners are looking for Urals or a Urals replacement," said a third trader in an international trading firm. "And we see that it won't be enough for everyone." ..."
Apr 12, 2019 | www.sott.net

Initially, Europeans gravitated to heavy, sour Venezuelan oil when sanctions on Iran hit in early November but then Washington also placed sanctions on the Latin American country in late January in a bid to oust President Nicolas Maduro.

Even though sanctions on Venezuelan crude will not come into effect until the end of April, the oil is effectively already untouchable as the U.S. State Department has exerted direct pressure on foreign companies to stop all dealings.

The two sets of sanctions combined have taken at least 800,000 barrels per day (bpd) out of the market, which is as much as what the Organization of the Petroleum Exporting Countries agreed to cut.

The United States granted waivers on Iranian oil to six jurisdictions including three countries in the region - Italy, Greece and Turkey - but only Turkey was able to continue purchases. It remains unclear whether the current waivers will be extended in May.

THE SOUR RUSH

The situation is set to worsen as European refiners emerge from their springtime maintenance just as Middle Eastern Gulf sour crude producers increasingly favor Asia, where refining capacity in the near term is set to jump.

Saudi Arabia, a major sour crude producer, is shouldering the bulk of the OPEC and non-OPEC cuts. Between October 2018 and March this year, the kingdom slashed its exports to Europe by nearly half, Refinitiv Eikon data shows.

Iraq reduced its contracted volumes for European refiners in 2019 and increasingly sells its oil to the highest bidder via tender. Iraqi supplies to Europe fell by over 40 percent to 355,000 bpd in March compared with 615,000 bpd in October 2018, Refinitiv Eikon data showed.

Meanwhile, Azerbaijan's 200,000-bpd STAR refinery in Turkey is slowly ramping up and will be a new competitor for dwindling sour oil.

Designed to run on sour grades such as Russian Urals and Iraqi Basra and Kirkuk, the refinery took 184,000 bpd of Urals in March, Refinitiv Eikon data showed.

"One expected STAR's launch to be a serious jolt for the market, but little did we know it would make the sour shortage this bad ... refiners are rushing for sours," a European trader said.

As the supply-side structure has changed, the spread between sour and the historically far more expensive light, sweet crude has thinned and even flipped in some instances.

In the Mediterranean, the light grade Kazakh CPC Blend trades at a discount to Urals and Kurdish crude, which used to be one of the region's cheapest oils.

The Urals price out of the Black Sea has also increasingly traded at a premium to Urals out of Baltic ports - previously a rare occurrence. The trend has prompted commodity price-reporting agency S&P Global Platts to start an industry consultation on changing how the Urals market is assessed.

"All refiners are looking for Urals or a Urals replacement," said a third trader in an international trading firm. "And we see that it won't be enough for everyone."

gdpetti ·

Regional development for the NWO command structure.... out with the OWO, in with the NWO.... thus the idiocy in the West as it outs itself in this prep work for global regime change... the American Empire simply isn't needed in it.... 'others' will take the reins soon enough.... but until then, let the outing continue...

It makes good theater of the absurd.... if we are going to go down in flames, best to enjoy the show, right?

RBHoughton

I believe its not just the departments of the US Government that inhibit purchases of Venezuelan crude or any other sanctioned goods. There is also the attitude of the banks that handle the transactions. They have been repeatedly hit with huge fines for facilitating trade to the point that they are reluctant to provide facilities to any country that Washington DC dislikes whether there are sanctions in place yet or not. This seems to be particularly true of European banks.

The effect on world trade is threatening to us all including USA. The sanctions policy cannot be maintained for long without hurting us as well. A second limitation on its usefulness is the efforts of the world's trading countries to agree alternative finance to the USD which is nearly complete now. Once that new financial system is floated, sanctions will have to end.

[Apr 12, 2019] It looks to me like the global economy may be in for at least one serious oil shock in the 2020s. Yet another titanic wave on the Peak Oil ocean.

Apr 12, 2019 | peakoilbarrel.com

Graywulffe x Ignored says: 04/10/2019 at 5:55 pm

Nice summary, Ron. Brought to mind the old Oil Drum days. Thanks for taking the time to provide this information. Given the admittedly not high-confidence prognostications in Saudi/world oil production, it looks to me like the global economy may be in for at least one serious oil shock in the 2020s.

Yet another titanic wave on the Peak Oil ocean.

[Apr 12, 2019] It is very obvious that what Saudi will have difficulties to maintain the current level of production as giant fields will experience a more rapid decline in the future.

Notable quotes:
"... add to that the usual woes of increasing internal oil consumption (3 mbd and rising fast) and the need to try and build their way out of their demise (requiring more oil and money), and the usual predictions of the 'export land model' look very reasonable, and disastrous for the House of Saud. There will be a tapered end, but the potential for acute instability in production and the in political and social environments of the country within the next decade is real. ..."
Apr 12, 2019 | peakoilbarrel.com

Carlos Diaz : 04/10/2019 at 1:44 pm

It's "coup de grâce."

A great article that offers a more realistic view of the very old giant oil fields. It is very obvious that what they are doing to maintain production will result in a more rapid decline in the future. When that happens KSA will be in a lot of hurt, and the world will have an abrupt awakening.

Adam Ash : 04/10/2019 at 5:27 pm
So my simple math says: 256 URR was to last 53 years, 74 URR at the same production rate will last 15 years. Seneca with a vengeance! Rite? EOLAWKI here we come!

add to that the usual woes of increasing internal oil consumption (3 mbd and rising fast) and the need to try and build their way out of their demise (requiring more oil and money), and the usual predictions of the 'export land model' look very reasonable, and disastrous for the House of Saud. There will be a tapered end, but the potential for acute instability in production and the in political and social environments of the country within the next decade is real.

[Apr 12, 2019] At some point Saudi will hit the Seneca Cliff. If they are doing all this advanced recovery to to keep flow rates up then fields will probably hit a wall and crash rather than slow decline.

Notable quotes:
"... Oil consumption has been increasing in all sectors and the growing global economy will require more oil in industry. You seem to think oil is just used in transportation. NOT true. ..."
"... Imagine oil production peaked today. In order for aviation to continue to grow, along with other industries that use oil. How many of the 98 million vehicles sold this year would need to be electric cars? How many electric motorcycles would have to be sold? ..."
"... I believe a Seneca cliff scenario would be a catastrophic one hence the reaction to such a scenario would also be catastrophic. ..."
"... World demand is currently over 100 mb/day, while production is at about 99 mb/day. Does that mean we are using up the already produced reserves? ..."
Apr 12, 2019 | peakoilbarrel.com

Karen Fremerman : 04/10/2019 at 12:17 pm

At some point the Seneca Cliff will be hit. If they are doing all this advanced recovery to to keep flow rates up then fields will probably hit a wall and crash rather than slow decline. Is my thinking correct on that? Karen
Hugo : 04/11/2019 at 2:20 am
Dennis

Oil consumption has been increasing in all sectors and the growing global economy will require more oil in industry. You seem to think oil is just used in transportation. NOT true.

https://www.statista.com/statistics/307194/top-oil-consuming-sectors-worldwide/

Imagine oil production peaked today. In order for aviation to continue to grow, along with other industries that use oil. How many of the 98 million vehicles sold this year would need to be electric cars? How many electric motorcycles would have to be sold?

https://motorcyclesdata.com/2019/03/25/world-motorcycles-market/

Knowing these answers gives us a real understanding of what needs to happen.

Schinzy : 04/11/2019 at 3:42 am

The Seneca cliff for World output requires heroic assumptions which are unlikely to be true in practice.

I strongly disagree with that assessment. I believe the probability of a Seneca cliff is increasing. I think oil extraction is an economic phenomena, not a geological phenomena. During economic expansion, a positive feedback loop is in place: oil extraction produces economic growth which encourages investment in oil extraction producing more economic growth. Once peak oil occurs, I anticipate that this feedback loop will go into reverse: decreased oil production will produce economic contraction which will discourage investment in oil extraction reducing extraction rates leading to economic collapse.

Without investment the IEA estimates that production would fall by 50% in 2025 and by 80% in 2040.

I actually think economic collapse is a great opportunity to introduce a new economic system. The one we have is not only unfair, it encourages environmental devastation.

David Graebner asks rhetorically how a theory such as neoclassic economics based on false hypotheses perdures. His answer is that you teach the biggest lies in the first year. That's why false preconceptions about the economy are so common. I think neoclassical economics chose the wrong mathematical tool to analyse the economy, they chose optimisation. I don't see anything optimal in the economy, I think differential systems would be a much more appropriate mathematical tool with which to analyse the economy, keeping track of money flows.

Our assessment of how the oil cycle will play out can be found here: https://www.tse-fr.eu/publications/oil-cycle-dynamics-and-future-oil-price-scenarios .

Iron Mike : 04/11/2019 at 6:05 am
Hi Ron,

I assume a Seneca cliff scenario would imply rapid economic collapse, as a result i think there will be war over resources. Between which countries i don't know, but i assume U.S will go to war with Russia and or China, via direct war or proxy wars in regions were the countries national security depends on specific resources. So the middle east would as usual be a key area of conflict.

I believe a Seneca cliff scenario would be a catastrophic one hence the reaction to such a scenario would also be catastrophic.

Fred Magyar : 04/11/2019 at 8:30 am
U.S will go to war with Russia and or China, via direct war or proxy wars in regions were the countries national security depends on specific resources.

Perhaps! However modern warfare tends to be very energy intensive. It seems to me a rather safe bet that in a post peak oil world, mostly running on renewables, it might be more likely that societies will be trying to conserve their energy resources and not waste it on war.

But the verdict is not yet in, on whether or not humans are smarter than yeast!

German Guy : 04/10/2019 at 12:53 pm
World demand is currently over 100 mb/day, while production is at about 99 mb/day. Does that mean we are using up the already produced reserves?
Dennis Coyne : 04/10/2019 at 3:03 pm
German Guy,

It simply means we are using oil that is being stored, the so-called oil stocks, eventually as these are reduced, oil prices start to rise and demand (consumption) decreases while supply (production) increases in response to the change in oil price.

[Apr 12, 2019] The northern three Saudi fields reached their Seneca Cliff somewhere around 2010 and began declining at several times 2%. They will decline to near nothing in the next few years

Apr 12, 2019 | peakoilbarrel.com

Ron Patterson : 04/10/2019 at 4:06 pm

Well, no, Ghawar is not declining at 2% per year. Ghawar did not start declining in 2004. And the southern two fields are not declining at all. The northern three fields reached their Seneca Cliff somewhere around 2010 and began declining at several times 2%. They will decline to near nothing in the next few years. Then Ghawar will have level production at somewhere around 2 million barrels per day and hold that level for a decade or two.

Ghawar cannot possibly be adequately described as one field. It is five different fields with five different decline and depletion rates.

When Saudi said, in 2006, that their average decline rate was down to almost 2%, that was the average for all their fields. Some fields were declining at a much faster rate and some fields were not declining at all. Khurais and Manifa were still to be ramped up. Those fields had been in mothballs and would be brought back on line. Now they are likely not declining at all but other fields are declining at a much faster rate than 2%.

But here is the important point. The depletion rate is another matter altogether. That figure is likely above 8% per year.

Ron Patterson : 04/10/2019 at 7:08 pm
Do you have production data for the various fields from 2006 to 2018?

Dennis, you know better than ask such a silly question. Saudi production of individual fields is a closely guarded secret.

Dennis, have you ever wondered why the Saudis keep all this data such a secret? Why don't they just let the actual data known to the world? What was the production data from Safaniya in 2018? Or what was the production data from Manifa in 2018? Or what was the production data from Khurais in 2018, or from Berri, or from all their other fields? And how did that compare to the production in 2017, or 2016?

Dennis, we don't know shit about any of this. We don't know because it is a closely guarded secret. Why, Dennis, Why?

They know Dennis, they know and they don't want you to know. Why?

I know why Dennis. Because what they actually report, which is almost nothing, is a lie. You simply choose to believe it. I do not. I choose to believe the analysis who try to figure out why they are lying. You choose to simply believe the Saudis.

Dennis, the idea that Saudi Arabia has 266 billion barrels of reserves is preposterous beyond belief. Even the Saudis realize that now are trying to slowly reduce that figure. Yet some people, like you, Robert Rapier and Michael Lynch, seemed perfectly ready to believe such an absurd figure. That just floored me. Goddammit, have some people gone insane?

Okay, I have said my peace here and showed my ignorance as to what Saudi Arabia actually can produce for the next 50 years. But you know, it is what they say they can produce.

You believe them. I don't. And neither of us can prove our case. And there it must rest until the actual production data comes in next year and next year and ..

Eulenspiegel : 04/10/2019 at 10:41 am
Good work Ron.

When this is true, that's the reason China is pushing electric travel as hard as they can.

They have more possibilites to know the truth (secret service) than we reading reports. And with SA and Russia having only round about 80 GB left, and producing each round about 10 mbpd, there are not many years left before a major oil incident.

I wonder why oil prices are that stable at the moment. Oil production fell hard this year so far, down everywhere except USA. And there the growth is decelerated.
And demand is still climbing, it will use up all the US growth projected by the optimistic EIA.
A 500 kbpd decline from OPEC is not included here, they still calculate with an increase from opec.

Last question: Where is Russia standing at the moment?

[Apr 12, 2019] Looks like Saudi Arabia counts internal consumption as revenue

Notable quotes:
"... Saudi Arabia, in 2018 produced approximately 3.76 billion barrels of crude only. Their BOE produced was approximately 4.75 billion barrels. That would account for the revenue is they sold every barrel of it. But they consumed a lot themselves. So other than that I have no explanation. Do they count their own consumption as revenue? ..."
Apr 12, 2019 | peakoilbarrel.com

Chris Martensonx : 04/10/2019 at 11:05 am

Ron,

I'm wondering if you can help solve a mystery.

In the bond prospectus SA revealed their financials. Puzzling to me was the claim of revenue of $356 billion.

Why puzzling?

Because Brent averaged ~$75/bbl in 2018. Divide $356 by $75 and you come up with 4.75 Gbbl, which when we divide by 365 days in a year, we get 13 million barrels per day production.

???

I can't get their numbers to work. Even with a 10% premium on their grades of crude (generous), that leaves 11.7 mbd of production . I can't get anything to line up here.

Any ideas?

Dennis Coyne : 04/10/2019 at 11:15 am
Chris,

They also produce NGL and natural gas, in 2016 it was about 1.94 Mb/d or 708 MMb of NGL, I have no idea what the average selling price is for NGL on World markets, it would depend on the mix of NGL of course.

Ron Patterson : 04/10/2019 at 11:31 am
Saudi Arabia, in 2018 produced approximately 3.76 billion barrels of crude only. Their BOE produced was approximately 4.75 billion barrels. That would account for the revenue is they sold every barrel of it. But they consumed a lot themselves. So other than that I have no explanation. Do they count their own consumption as revenue?
Dennis Coyne : 04/10/2019 at 11:54 am
EIA has about 4.5 Gb of total liquids produced by KSA in 2018, that would imply $79/boe average selling price.

I suppose in accounting terms the Saudi Government could pay Aramco for the subsidized oil and the 4.75 Gbo would give us the $75/boe selling price.

[Apr 09, 2019] The danger of Seneca cliff on oil production is growing

Apr 09, 2019 | peakoilbarrel.com

Carlos Diaz: 04/08/2019 at 8:07 pm

The decline is likely to be less steep than the increase

Have you heard about a Seneca cliff? It is called that way because Seneca in his letter number 91 to Lucillius (Epistulae Morales ad Lucilium), written towards the end of the year AD 64, a year before he died, refers to the fire that destroyed Lugdunum (Lyon) the summer of that year in the following terms:

It would be some consolation for the feebleness of our selves and our works, if all things should perish as slowly as they come into being; but as it is, increases are of sluggish growth, but the way to ruin is rapid.

It appears he knew almost two thousand years ago what you don't.

Hickory: 04/09/2019 at 10:12 am
I expect that a long slow declining tail of production will have some abrupt jolts downward along the way, and end up lower quicker as a result.

The jolts downward will come as producing countries become failed states and the chaos disrupts operations.

For examples of how this comes to be, just look at the past 5 yrs of Venez and Libya as examples. Sure they may pick back up at some point, but overall effect is diminished global production, well below a theoretically well managed industry.

Secondly, (and likely a smaller effect) some deposits will likely be kept in the ground because of choices some cultures make. For example, I could see the USA deciding to keep its large remaining coal deposits largely in the ground after 2030. Canada could decide to put a big constraint on oil sand production, keeping just enough for domestic use, if they so desired.

Carlos Diaz: 04/09/2019 at 7:12 pm
Why you think such scenario is so improbable? Venezuela is living a Seneca cliff in its oil production right now. Did anybody predicted it before it took place?

We have no idea of what will happen after Peak Oil. Some people assume nothing, while others think it will be the end of our civilization. Somewhere in between probably. But I fail to see how the economy can take it well if for most applications we can't substitute oil. The globalization is run on oil and its derivatives.

Your assumptions can only be valid at this side of the peak. If you think otherwise you fool yourself.

[Apr 07, 2019] The Ultimate Pivot Saudi Betrayal Of The Petrodollar

Apr 07, 2019 | www.zerohedge.com

Authored by Tom Luongo,

Saudi Arabia has gone nuclear, threatening the petrodollar . Or has it?

The report from Zerohedge via Reuters that Saudi Arabia is angry with the U.S. for considering a bill exposing OPEC to U.S. antitrust law is a trial balloon.

The chances of the U.S. bill known as NOPEC coming into force are slim and Saudi Arabia would be unlikely to follow through, but the fact Riyadh is considering such a drastic step is a sign of the kingdom's annoyance about potential U.S. legal challenges to OPEC.

If these things are so unlikely then why make the threat public? There are a number of reasons.

First, one must remember that the Saudis are hemorrhaging money. Their primary budget deficit in 2018 was around 7% of GDP. Since the 2014 crash in oil prices it has gone from almost zero sovereign debt to $180 billion in debt to finance its spending, or around 22% of GDP.

2019's budget will be even bigger as it tries to deficit spend its way to growth. It's needs for a higher oil price are built into their primary budget not their production costs, which are some of the lowest in the world.

Second, the Saudis finally opened up t he books on Saudi-Aramco this week. And it revealed the giant is far more profitable than thought. It has is eye on acquiring stakes in some of the biggest oil and gas projects out there these past couple of years. It's floating its first public bond to buy a stake in SABIC to get into the mid and downstream petroleum markets.

Third, the Saudis budget deficit is tied directly to its having pegged the Riyal to the U.S. dollar which leaves them at the mercy of the dollar price of oil. It doesn't have the flexibility of Russia who free-floated the ruble back in late 2014 to pay local expenses in devalued local currency when oil prices drop.

This is why the Saudis are struggling financially and why Aramco is looking to use its financial might to finally begin making friends and influencing people around the world.

So, a threat to de-couple Saudi oil sales from the dollar is a threat a long time coming. I've been talking about this day since I started this blog and for years previous when I wrote for Newsmax.


MalteseFalcon , 5 minutes ago link

China is now the largest consumer of SA oil, so the clock is ticking on the petrodollar.

Aramco is super profitable. The oil scam of the last 45 years has fucked the West in the a$$.

D-plorable , 35 minutes ago link

"A decade of ZIRP has created a massive synthetic short position in the dollar in the form of emerging market corporate and real estate debt.

But after that? And after that synthetic short pushes the dollar much higher and the price of oil into the floor?"

Honrst question to the economics gurus on ZH:

How does a short position on the dollar push the price higher?

steverino999 , 36 minutes ago link

Saudis should flip Trump the bird and start selling their oil in yuan or euro, and buy weapons from Russia. America's stranglehold over global economics is coming to an end, all because of Donald Trump.

yerfej , 13 minutes ago link

Yes this has to be true and of course nothing before trump had anything to do with anything it is all a mirage.

carman , 48 minutes ago link

"Rome" is burning, and that's just what it deserves. Decades of endless wars and it's "clipping" of the currency, will end with collapse. Many of its citizens can't raise $400. for an emergency but they can have their Netflix and Prime subscriptions to pay for. Hey, War Inc. is reaching its end.

roadhazard , 1 hour ago link

The Saudis are trapped. They have All US military equipment and have to have US hands to operate their air force and who knows what else. Plus they have too many skeletons that the US can hurt them with.

ThomasEdmonds , 1 hour ago link

"Peace for Israel" would include outside businesses or investors sticking to BDS actions. Other than the United States and Europe, natural law would suggest no of law should instruct any counterparty as to what Israel entity one should or should not engage in commerce.

In another time it was called free market capitalism.

Israeli lobbies shouldn't be able to squelch the First Amendment by requiring public servants to sign agreements not to condemn Israel-related foreign policy or domestic decisions.

Boing_Snap , 2 hours ago link

The empire of paper currency and oil supported by bankers and their wars is coming to an end.

Fracking is a desperate attempt at keeping internal oil production going, it's akin to burning the roof shingles of your house to keep warm. The costs to get the oil outweigh the usefulness of the endeavor, the only ones benefiting are the bankers loaning the money to the frackers.

Rome did the same it self destructed, and rotted internally, meanwhile the cost of empire drained resources and the vassals began to act in their own self-interests. The Khazarian bankers remained the host drained, and they began to leech the new fledgling empires.

https://www.historynet.com/why-rome-fell.htm

frankthecrank , 2 hours ago link

Where do you see bankers in that history? Rome devalued its own gold coins by mixing tin in with it. The soldiers felt cheated. Meanwhile, Rome allowed mass migration to Rome and southern Italy prompting real Romans to move to Gaul (northern Italy was "Cisalpine Gaul"). Rome wasn't even the capitol when it was sacked--Ravenna was. Get your history straight. Real Romans were not willing to fight for city that wasn't their own anymore.

So too, what will bring down the US is mass migration from the third world--just what the Comintern wanted 90 years ago.

Keter , 2 hours ago link

The US petrodollar reserve currency status has been a disaster for middle class Americans much to their ignorance. It has allowed the financial-political cabal elite to enrich themselves at the expense of deficit and debt expansion while impoverishing the middle class and bringing in replacement labor serfs. Time to rip this band-aid off and the American middle class to reclaim their country, that will probably ultimately lead to revolution.

Pro_sanity , 2 hours ago link

It must, I do wonder if violence can be avoided?

sanctificado , 2 hours ago link

Suure, blame Saudi Arabia for the "betrayal". But of course overlook the fact that the US Congress passed a law that put 9/11 squarely on SA's shoulder when Israhell is the one that did 9/11 .

Keter , 2 hours ago link

Operation Northwoods redux; the Mossad may have had a big role, but it could not have been pulled off without complete acquiescence from the DIA. It is all part of the long game. {See Donald Rumsfield handling empty gurney on Pentagon grounds}

Milton Keynes , 2 hours ago link

" Second, the Saudis finally opened up t he books on Saudi-Aramco this week. And it revealed the giant is far more profitable than thought. "

I would place about as much credibility in the Aramco books as I would in Bernie Madoff's books.

Aramco pumps oil, that's about all we really know for sure. Given the intertwining with the saudi state, it's not a conventional oil company in any manner, it's much more a PDVSA then a StatOil.

To Hell In A Handbasket , 2 hours ago link

Buys oil how? You fuckers have been printing paper and buying resources with it. You guys simply lack the ability to extrapolate, because if you did, the current lifestyle of the USSA, without dollar world reserve status and the petrodollar perk, is utterly ******* horrendous.

Never will the axiom "I never knew how good I had it, until it was gone" be more apt, when the USSA faces her date with reality. $22 trillion in debt, world reserve currency, petrodollar, Wall Street a cesspit of financial fraud, no adverse market reaction to continuous money printing and has the audacity to complain trade deficits and OPEC? lol

Death to the USSA cannot come soon enough. A parasite nation of resource theives and the world knows it.

Pro_sanity , 2 hours ago link

Sorry here comes an ad hominem, the Saudi's are emblematic of all Arabs: cowards.

cashback , 2 hours ago link

What a motherfuckin degenerated bastard.

Palestinians with stones and sticks against F-35's and M-16's kick the balls of Jews and have been doing so for the past 100 years.

Iraq, Libya, Syria, Yemen and everywhere the Anglo-Zionists have waged war, Arabs have put on a resistance that left the aggressors astonishing.

And for the fact: Arabs created the biggest empire known to men in the matter of 80 years that was almost 3 times bigger then the mighty Rome.

White snowniggers like Pro-sanity **** their pants by what Arabs have done.

InTheLandOfTheBlind , 3 hours ago link

why is it not reported that through Citigroup, the Saudis hold a large financial interest in shale production?

[Apr 06, 2019] Of course the Saudis are laughing at Trump. The world is laughing at Trump. He is an ignorant baffoon.

Apr 06, 2019 | peakoilbarrel.com

vonfleck, 04/05/2019 at 4:53 pm

All quiet on the saudian front…

https://www.arabianbusiness.com/energy/416992-saudi-aramco-reveals-sharp-output-drop-at-worlds-largest-oil-field

Ron Patterson x Ignored says: 04/06/2019 at 12:24 pm

Trump Declares War on OPEC, Saudis Laugh as Oil Price Surges

Donald Trump is ramping up his attack on oil prices as US crude hit a 5-month high today. While up to now the US president has been focused on denouncing high energy costs via Twitter, it appears he now is looking to do more than merely bash OPEC online. As CNBC reported, the US wants to ensure "dominance" in this sector through a blockbuster executive order designed to boost pipeline infrastructure. In reality, Trump walks a dangerous tightrope when it comes to crude.

Of course the Saudis are laughing at Trump. The world is laughing at Trump. He is an ignorant baffoon.

likbez says: 04/06/2019 at 7:59 pm

Of course the Saudis are laughing at Trump. The world is laughing at Trump. He is an ignorant baffoon.

May be ignorant bully, not only (or so much) baffoon ? He practices what is called “gangster capitalism” on international arena for some time. Totally ignores international law. Does not even use a fig leaf as previous administrations. Trump is “Full Spectrum Dominance” in action 😉

In view of the Saudi role of the guarantor of the “dollar as the reserve currency” system his behavior might well be a reckless move, which totally contradicts Trump’s behavior in Khashoggi case. Kind of direct pressure is Soprano style: “Do what I want, or…”

If Saudi stop selling oil for dollars that will be a very bad news for the USA. Hopefully they can’t do this being a Washington vassal, but to insult a vassal is not the best diplomacy, anyway.

Why Trump can’t understand that oil is limited and higher prices might well be the best strategy as they helps to find alternatives, develop infrastructure (for example for EV passenger cars) and prepare to inevitable shortages, or even the Seneca Cliff in oil supply.

Why he wants to propel/sustain the US stock market at any cost?

Low oil prices can help to kick the neoliberal can down the road, but they can’t save the USA from the “secular stagnation” and might not be able to save the USA from the recession too because consumption is low: credit card debt reached 0.87 trillion in the fourth quarter of 2018 On other words the bottom 80% of the USA population might well be debt slaves of the US banks.

On March 25, 2019 yields curve inverted the first time since mid 2007: The yield on the U.S. 10-year Treasury note dipped below the yield on the 3-month paper.

In other words secular stagnation is the result of the crisis of neoliberalism both as the ideology and as the social system dominant in the world. Neoliberalism entered “zombie” stage in 2008 and it continues to exist (and even counterattack, as in Argentina and Brazil) only due to the fact that there is no acceptable alternative and the return to the New Deal capitalism (which many wish) is difficult or impossible because management now is allied with the capital owners, not with workers (as was temporary the case after the Great Depression; that alliance ended in 70th).

I just do not understand if Trump is on drags such as amphetamine, see rumors at https://heavy.com/news/2016/10/donald-trump-drugs-drug-use-sniffing-sniffles-cocaine-clinton-debate-test ; BTW captagon was/is a favorite drag of ISIS headchoppers which allowed them to demonstrate the level of toughness in fight and self-sacrifice they did, as it switches off the instinct of self-preservation enhancing the person’s ability to do dangerous things. ( https://www.vox.com/world/2015/11/20/9769264/captagon-isis-drug ).

Or he is a “naturally stupid” bully, who does not care to learn diplomatic etiquette and some elements of diplomacy, while on the job.

In both cases he is a real embarrassment for the nation, is not he?

While I do not support Russiagate witch hunt, his behavior really raises questions about fitness for the office.

Also Bush II style (as in Iraq WDM fiasco ) bunch of crazy warmongers, neocons that control Trump administration foreign policy (Haley in the past, Pompeo, Bolton now ) is not what his voters expected based on his election promises.

In a sense, he proved to be Republican Obama, another master of “bait and switch” maneuver.

Looks like we are living during what Chinese call “interesting times”, aren’t we ?

[Apr 06, 2019] Remember Peak Oil? It's back!

Notable quotes:
"... Hubbert wrote in 1948: "How soon the decline may set in is not possible to say, Nevertheless the higher the peak to which the production curve rises, the sooner and sharper will be the decline." ..."
"... In fact, Ghawar is not as resilient as we were led to believe. We just found out that its output has fallen substantially since Aramco previously came clean on its reserves and production. If Ghawar is losing momentum fast, peak oil – remember that theory? – might be closer than we had thought. And Ghawar is just one of dozens of enormous conventional-oil reservoirs scattered around the planet that are in various stages of decline. ..."
"... Those include the North Sea, Alaska's Prudhoe Bay, and Reguly reminds us that Mexico's Cantarell reservoir used to supply 2.1 million barrels a day and is now down to 135,000. ..."
Apr 06, 2019 | peakoilbarrel.com

Ron Patterson 04/06/2019 at 12:05 pm

Remember Peak Oil? It's back!

It seems that the biggest Saudi field is losing its punch.

Years ago we used to talk a lot about peak oil, the prediction made by M. King Hubbert that the easy oil was going to run out, that it was going to get harder and harder to find the stuff, and it was going to get more and more expensive to get out of the ground.

Hubbert wrote in 1948: "How soon the decline may set in is not possible to say, Nevertheless the higher the peak to which the production curve rises, the sooner and sharper will be the decline."

According to the predictions made back in 2005, right about now the Saudis are running out and we are smack in the middle of confusion, heading for chaos. Of course we are not, we are flooded with fossil fuels, thanks to the fracking boom.

But according to Eric Reguly, writing in the Globe and Mail, there is trouble ahead, because that prediction about Saudi oil may not be that far off. He writes that the giant Ghawar field used to produce ten percent of the world's oil, five million barrels a day.

The US Permian shale basin now supplies 4.1 million barrels a day, but fracked wells run out pretty quickly, and the fracking companies are all losing money. Better sell that pickup truck; it may well cost a lot more to fill it. As Reguly concludes, the Ghawar field is indeed in trouble,"and if it does collapse, peak oil will come a bit sooner."

In fact, Ghawar is not as resilient as we were led to believe. We just found out that its output has fallen substantially since Aramco previously came clean on its reserves and production. If Ghawar is losing momentum fast, peak oil – remember that theory? – might be closer than we had thought. And Ghawar is just one of dozens of enormous conventional-oil reservoirs scattered around the planet that are in various stages of decline.

Those include the North Sea, Alaska's Prudhoe Bay, and Reguly reminds us that Mexico's Cantarell reservoir used to supply 2.1 million barrels a day and is now down to 135,000.

[Apr 06, 2019] Saudi News Saudi Aramco reveals sharp output drop at world's largest oil field - ArabianBusiness.com

Apr 06, 2019 | www.arabianbusiness.com

Ghawar in Saudi Arabia, the world's largest conventional oil field, can produce a lot less than almost anyone believed It was a state secret and the source of a kingdom's riches. It was so important that US military planners once debated how to seize it by force. For oil traders, it was a source of endless speculation.

Now the market finally knows: Ghawar in Saudi Arabia, the world's largest conventional oil field, can produce a lot less than almost anyone believed.

When Saudi Aramco on Monday published its first ever profit figures since its nationalization nearly 40 years ago, it also lifted the veil of secrecy around its mega oil fields. The company's bond prospectus revealed that Ghawar is able to pump a maximum of 3.8 million barrels a day - well below the more than 5 million that had become conventional wisdom in the market.

"As Saudi's largest field, a surprisingly low production capacity figure from Ghawar is the stand-out of the report," said Virendra Chauhan, head of upstream at consultant Energy Aspects Ltd. in Singapore.

... ... ...

[Apr 06, 2019] Permian tight oil production should peak flatten in the next few months by Art Berman

Apr 06, 2019 | www.macrovoices.com

[Apr 06, 2019] Canada: January production is lower but exports increased on year-to-year basic

Apr 06, 2019 | peakoilbarrel.com

Energy News x Ignored says: 04/05/2019 at 11:19 am

Canada produced 4,524 kb/day of crude oil & equivalent products in January down -278 m/m
Exports of crude oil & equivalent products totaled a record 3,860 kb/day in January, up 9.1% from January 2018
Chart for production: https://pbs.twimg.com/media/D3ZukJvX4AASI8p.png
Chart for crude oil inventory https://pbs.twimg.com/media/D3ZuEauWsAIsGcD.png

2019-04-05 Statistics Canada, press release https://www150.statcan.gc.ca/n1/daily-quotidien/190405/dq190405b-eng.htm

[Apr 05, 2019] Petrodollar Panic Saudis Threaten To Dump USD-Oil Trades Over OPEC Anti-Trust Bill

Apr 05, 2019 | www.zerohedge.com

Three year ago - almost to the day - Saudi Arabia rattled its first sabre towards the United States, with an implicit threat to dump US Treasuries over Congress' decision to allow the Saudis to be held responsible for the 9/11 attacks.

In a stunning report at the time by the NYTimes , Saudi Arabia told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars' worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks.

Then, six months ago , the Saudis once again threatened to weaponize their wealth as the biggest importer of arms from America in the world.

You will find more infographics at Statista

And now , Reuters reports, citing three unidentified people familiar with Saudi energy policy, Saudi Arabia is threatening to drop the dollar as its main currency in selling its oil if the U.S. passes a bill that exposes OPEC members to U.S. antitrust lawsuits .

While the death of the petrodollar has long been predicted (as the petroyuan gathers momentum), this is the most direct threat yet to the USDollar's exorbitant privilege...

"The Saudis know they have the dollar as the nuclear option," one of the sources familiar with the matter said.

"The Saudis say: let the Americans pass NOPEC and it would be the U.S. economy that would fall apart," another source said.

Riyadh reportedly communicated the threat to senior U.S. energy officials , one person briefed on Saudi oil policy told Reuters

As Reuters details, NOPEC, or the No Oil Producing and Exporting Cartels Act, was first introduced in 2000 and aims to remove sovereign immunity from U.S. antitrust law, paving the way for OPEC states to be sued for curbing output in a bid to raise oil prices.

While the bill has never made it into law despite numerous attempts, the legislation has gained momentum since U.S. President Donald Trump came to office. Trump said he backed NOPEC in a book published in 2011 before he was elected, though he not has not voiced support for NOPEC as president.

Trump has instead stressed the importance of U.S-Saudi relations, including sales of U.S. military equipment, even after the killing of journalist Jamal Khashoggi last year.

A move by Saudi Arabia to ditch the dollar would resonate well with big non-OPEC oil producers such as Russia as well as major consumers China and the European Union, which have been calling for moves to diversify global trade away from the dollar to dilute U.S. influence over the world economy.

Russia, which is subject to U.S. sanctions, has tried to sell oil in euros and China's yuan but the proportion of its sales in those currencies is not significant.

Venezuela and Iran, which are also under U.S. sanctions, sell most of their oil in other currencies but they have done little to challenge the dollar's hegemony in the oil market.

However, if a long-standing U.S. ally such as Saudi Arabia joined the club of non-dollar oil sellers it would be a far more significant move likely to gain traction within the industry.

Perhaps this explains why Russia has been dumping dollars in favors of gold in recent months ...

And why China suddenly admitted to increased gold reserves...

And why there has been a spike in yuan buying by reserve managers last year, as the IMF pointed out in a recent report.

So the next time you hear an analyst on CNBC categorically dismiss the notion that the loss of the dollar's reserve currency status isn't something that markets should take seriously (even as several credible voices have warned that it should be), you'd do well to remember this chart.

Nothing lasts forever.

[Apr 02, 2019] As long as the world wide economy remains on its feet that there will be huge increases in demand for oil for transportation.

Apr 02, 2019 | peakoilbarrel.com

OFM x Ignored says: 03/30/2019 at 7:51 am

I'm sure that so long as the world wide economy remains on its feet that there will be huge increases in demand for oil for transportation.

But nobody seems to give any thought here to things that will reduce demand. Cars will be driving themselves soon. Think about trains. Before too much longer, railroaders will be able to move stuff on trains almost as nimbly as truckers do today, at least on city to city basis when the cities are at least a couple of hundred miles apart. Long distance trucking may be a thing of the past within, like camera film and typewriters, within a couple of decades. These possibilities are worthy of thought if you are in the oil biz for the long haul.

Every country that imports oil is going to have a powerful incentive to reduce demand for it to the extent it can as depletion sooner or later pushes one exporting country after another into the importer category. Countries in the Middle East with oil and gas to export are going to find it so profitable to build wind and solar farms that they will be building them like mushrooms popping up after a spring rain, because they can sell some or maybe even most of the oil and gas they are burning now to generate electricity, thereby earning a big profit on their solar and wind farm investment.

My thinking is that these changes will actually PROLONG our dependence on oil, taken all around, by helping hold the price down so we can afford to run existing legacy equipment, and have affordable petrol based chemicals, etc. I don't think anybody currently in the biz needs to worry about selling out anytime soon, lol. But considerations such as these may have a huge impact on exploration and development starting within a decade or so.

Times change. Doom doesn't necessarily have anything to do with it.

[Apr 02, 2019] Brazil's oil production is down

Apr 02, 2019 | peakoilbarrel.com

Energy News x Ignored says: 04/01/2019 at 1:52 pm

Brazil's oil production at 2,489 kb/day during February, which is down -142 from January
2018 average 2,587 kb/day
No press release yet, waiting to see if they mention the new FPSOs ANP -> http://www.anp.gov.br/
Chart: https://pbs.twimg.com/media/D3FsLyMW0AANPL4.png

[Apr 01, 2019] Trump Is Bullying OPEC Again. He Might Get His Way

Apr 01, 2019 | www.bloomberg.com

Oil just had its best quarter in about a decade. Naturally, President Donald Trump is complaining. Donald J. Trump ‏ Verified account @ realDonaldTrump Mar 28

Very important that OPEC increase the flow of Oil. World Markets are fragile, price of Oil getting too high. Thank you!

The real target of this tweet is unmistakably Saudi Arabia, the one OPEC member with enough idle capacity to make a difference to the producer group's output. It's also the one over which the U.S. has the most leverage.

Straightforward economic considerations would see Saudi Arabia dismiss the request out of hand, but political calculations make its choice more difficult.

OPEC production fell by around 1.5 million barrels a day between December and February, and probably dropped further in March. Saudi Arabia made by far the biggest voluntary reduction . It contributed almost two thirds of the group's total output cut as measured against individual baselines in February, and made deeper cuts than it had promised it would implement each month this year.

[Mar 30, 2019] The US desperately needs Venezuelan oil

Highly recommended!
Mar 30, 2019 | www.moonofalabama.org

dh-mtl , Mar 30, 2019 5:00:04 PM | link

The U.S. desperately needs Venezuelan oil.

They lost control of Saudi Arabia, after trying to take down MBS and then betraying him by unexpectedly allowing waivers on Iranian oil in November.

The U.S. cannot take down Iran without Venezuelan oil. What is worse, right now they don't have access to enough heavy oil to meet their own needs.

Controlling the world oil trade is central to Trump's strategy for the U.S. to continue its empire. Without Venezuelan oil, the U.S. is a bit player in the energy markets, and will remain so.

Having Russia block the U.S. in Venezuela adds insult to injury. After Crimea and Syria, now Venezuela, Russia exposes the U.S. as a loud mouthed-bully without the capacity to back up its threats, a 'toothless tiger', an 'emperor without clothes'.

If the U.S. cannot dislodge Russia from Venezuela, its days as 'global hegemon' are finished. For this reason the U.S. will continue escalating the situation with ever-riskier actions, until it succeeds or breaks.

In the same manor, if Russia backs off, its resistance to the U.S. is finished. And the U.S. will eventually move to destroy Russia, like it has been actively trying to do for the past 30 years. Russia cannot and will not back off.

Venezuela thus becomes the stage where the final act in the clash of empires plays out. Will the world become a multi-polar world, in which the U.S. becomes a relatively isolated and insignificant pole? Or will the world become more fully dominated by a brutal, erratic hegemon?

All options are on the table. For both sides!

[Mar 28, 2019] U.S. Shale Output may Start Dropping Next Year - Oil (General) - Oil Price Community

Mar 28, 2019 | community.oilprice.com

[Mar 28, 2019] Trump sells out his base to please Wallstreet and Oil industry - Oil (General) - Oil Price Community by JJCar

Looks like most participants in the discussion viry form highly incompetent to delusional...
Notable quotes:
"... The oil companies sell the oil at cost to their offshore companies whose headquarters are a P.O Box in Bermuda, Cayman Islands or other low tax/no tax domicile , who in turn sells it to enduser. The US does not collect any Corporate tax. But the Trump friends get richer and the working class will be paying up for it. ..."
"... TRUMP 2020 has already raised $180 Million in donations. Take a look at the list of contributors. Surprise. . . . . Surprise. . . . . Surprise. ..."
"... Trump new slogan, " Make My Friends Richer Again .. .. .. .. .. and Again and Again." ..."
"... So you are saying that the little bait and switch with the Saudis to crash oil prices for the mid terms was selling out the public? LOL! Why don't you stick to oil instead of posting political crap? There was no Bait and Switch. To think that Saudi's/OPEC ever sacrificed for the benefit of the United Stated or world economy is dilutional. They tried to take out US oil enterprise in 1970's , 1985 -1986, 1998-1999 and recently 2015. ..."
Mar 20, 2019 | community.oilprice.com

JJCar

Trump Whitehouse just released a report from Council of Economic Advisors that said high oil prices are good for US economy. A little "wink and a nod" to oil.

Trump recently stated, " I'm comfortable with $65 oil." That's not a free market pricing.

High oil prices for oil companies and their partners does not outright the benefit to the consumer and economy . $50 to $55 oil would set the U.S. and world economy booming. Trump wrote about OPEC INFLATED PRICES in his 2011 book. He campaigned to control OPEC IN 2016.

He sold out the working class public to please buddies like Harold Hamm of Continental Energy, Oil Companies and the Wall street boys that sat down with OPEC at Ceraweek for a nice dinner. It has been reported that about two dozen firms attended.

One Houston Shale producer said the US Shale companies and Banks that finance them threatened to ruin them.

Some (5) oil companies rightfully declined the invitation such as Conoco. The CEO stated they are Market driven and will live with the volatility.

Sad. The oil found under the United States is a valuable "Natural Resource" but it is also a valuable "National Resource" and should benefit all.

The oil companies sell the oil at cost to their offshore companies whose headquarters are a P.O Box in Bermuda, Cayman Islands or other low tax/no tax domicile , who in turn sells it to enduser. The US does not collect any Corporate tax. But the Trump friends get richer and the working class will be paying up for it.

Just like Trump reneged on his campaign promise regard the HUGE Wallstreet tax loophole "carried interest". He now does so oil as a favor to his buddies.

TRUMP 2020 has already raised $180 Million in donations. Take a look at the list of contributors. Surprise. . . . . Surprise. . . . . Surprise.

When the traders see this oil will be up today. Need to wait for new pipelines. . . . Q4.

Oil stabilized in the $50's would set both the US and World economies on fire.

Trump new slogan, " Make My Friends Richer Again .. .. .. .. .. and Again and Again."

Edited 40 minutes ago by JJCar
Typo
wrs

So you are saying that the little bait and switch with the Saudis to crash oil prices for the mid terms was selling out the public? LOL! Why don't you stick to oil instead of posting political crap? There was no Bait and Switch. To think that Saudi's/OPEC ever sacrificed for the benefit of the United Stated or world economy is dilutional. They tried to take out US oil enterprise in 1970's , 1985 -1986, 1998-1999 and recently 2015.

They do take care if the President wants low oil price or not . Going back to at least the 1980's after the US presidents term ended they were invited to Saudi Arabia or Kuwait to give a speech for $1 Million. Bubba liked the idea so much he started a whole new industry out of it. The Saudi's during Obama Administration decide "why wait" and the King gave Michelle Obama two necklesses valued over $1.5 million.

As was stated on Bloomberg the major sell off in December was more a demand problem than a supply problem..

As soon as Trump announced in May '18 that sanctions would go into effect in November Saudi exports went straight up. Not because they were doing Trump a favor it was because demand from their clients. They did very well May to Oct. If you are a major importer of OPEC oil and you hear that sanction are going to effect in Nov what do you do ? ? ? You top off your tanks with crude. . . . . . . you turn up the volume at your refineries to stock pile finished product of gas, diesel, etc. (which all of Asia did) When sanctions had to be delayed and did not materialize the demand/price dropped for a while.

Trump was under extreme pressure due to European and Asian economic downturns. He didn't want to cause a recession . So he delayed the sanctions.

MONEY TALKS

During the 2016 election the big money from Oil and Wallstreet went to.Hillary. She knew where her bread was buttered. Why do you think her State Department approved the Keystone XL. The State Department had a study done on the Keystone XL . The consulting contract was awarded to a firm that was run by two former Clinton Campaign workers. After her approval the Canadian Chamber of Commerce gave the Clinton Foundation a large donation. Several large oil companies with interest in the Cd Tar Sand gave the Clinton Foundation large donations. A setup.

Before she announced in 2016 Clintons personal Lawyer and Clinton Foundation Lawyer was put on the Board of Blackrock the World's largest Hedgefund whose CEO Fink was an outspoken critic of legislation to end carried interest.

During 2012 campaign Senator Chuck Schumer (D-NY) Insisted the carried interest tax loophole had to be eliminated and attacked Romney for benefiting from carried interest. The next election cycle guess who received the largest portion of the donations from Hedge Funds . . . . that's right the good Senator Chucky Schumer. He never mentions Carried Interest again.

Democrat or Republican .. .. .. they're all the same. Show me the Money.

Doesn't anyone believe in free markets anymore. I think Supply and Demand economics prevails. JH and WS you might want to lighten up on your Shale equities holdings before the three new pipelines start pumping by the end of year. Before then oil should continue to rise. lol

Edited 35 minutes ago by JJCar
Typo

Rodent
On 3/20/2019 at 1:52 PM, Oil_Engineer said:

I think China has invested heavily in oil producing regions to gain control just in case oil prices rise considerably.

Agreed. China has invested heavily in Venezuelan oil in making large loan for oil deals, and now it is doing the same in South Sudan.

shadowkin

Yours is an interesting interpretation and conclusion, probably from the Bloomberg article. Consider the following 4 excerpts from that same report.

  1. "...increased production has undoubtedly served as a boon to the American position internationally as well as a buffer for American consumers'
    sensitivity to oil prices"
  2. "As the United States continues to expand its position as an exporter in global oil markets, it better insulates itself from the adverse welfare and GDP
    consequences of high oil prices and price spikes"
  3. "A second effect of the changing U.S. net petroleum position is that it may increase protection from the business cycle that is exacerbated by high
    oil prices"
  4. "Kilian and Vigfusson (2017) observe that in the period since 1974, U.S. economic recessions have been universally preceded by increases in the
    price of oil"

These 4 quotes are consistent with more US oil on the market and lower prices. The last quote especially indicates it's doubtful the Trump administration desires high oil prices and would be contradictory to Mike Pompeo urging oil companies to continue pumping just 2 weeks ago. Not that it would be unprecedented for government to say contradictory things but I think it's quite clear the US government wants 'low' oil prices.

Here is the quote Bloomberg extracts, leaving out the first sentence.

"The shrinking level of U.S. net imports of petroleum provides indirect benefits through macroeconomic channels by reducing sensitivity to oil price shocks. If the United States becomes an annual net exporter of petroleum, higher oil prices would, on average, help the U.S. economy. In this case, the net gains for producers, and to their private partners that own mineral deposits, would outweigh the higher costs for consumers. Such a change would have a number of important policy implications"

Granted the second to last sentence does seem to favor higher prices but seems to be contradicted by the first and the above 4 quotes. And it then seems to stress, in the last sentence, that it is not advocating for higher prices but that it is a consequence that must be considered when choosing policies. It would not be unheard of for advisors to have conflicting views and is typical of bureaucratic infighting.

You can always count on Bloomberg, or most of the msm for that matter, to write a clickbaity headline with no substance in the story and a questionable interpretation (along with a twitter insert). I think the writer simply went to the conclusion of the report and pulled those sentences out without reading anything else and put "Trump wrong" in the headline. She has a deadline to beat after all.

DanilKa
On 3/20/2019 at 1:30 PM, Tomasz said:

Well if you have such a big shale oil industry and China = your biggest geopolitical rival is also a biggest oil importer imho oil in the 70's is better than in 50's. Because today China imports something like 8 to10 times more oil than USA.

China imports ~10MM bopd, US ~7 but with liquids it is more https://www.eia.gov/todayinenergy/detail.php?id=38672

mthebold
On 3/20/2019 at 9:29 AM, JJCar said:

Trump Whitehouse just released a report from Council of Economic Advisors that said high oil prices are good for US economy.

Not true . Trump wrote about OPEC INFLATED PRICES in his 2011 book. He campaigned to control OPEC IN 2016. He sold out the working class public to please buddies like Harold Hamm of Continental Energy and the Wallstreet boys that sat down with OPEC at Ceraweek.

Sad. The oil found under the United States is a valuable "Natural Resource" but it is also a valuable "National Resource" and should benefit all. The oil companies sell the oil at cost to their offshore companies whose headquarters are a P.O Box in Bermuda, Cayman Islands or other low tax/no tax domicile , who in turn sells it to enduser. The US does not collect any Corporate tax. But the Trump friends get richer and the working class will be paying up for it.

Just like Trump reneged on his campaign promise regard the HUGE Wallstreet tax loophole "carried interest".

TRUMP 2020 has already raised  $180 Million in donations. Take a look at the list of contributors. Surprise. . . . . Surprise.

When the traders see this oil will be up today.  Need to wait for new pipelines. . . . Q4. 

Oil stabilized in the $50's would set the US and World economies on fire.

Trump new slogan, " Make My Friends Richer Again and Again and Again."

Whether the US wants higher or lower prices depends on the immediate circumstances. When Trump was first elected, lower prices may have been better. Now that unemployment has dropped, wages are rising, and Trump's voters are more confident, slightly-elevated prices may be more advantageous. Why? Because higher prices accelerate US oil production. This simultaneously improves our economy and lowers our national defense expenses. Once we're a net exporter, we'll want even higher prices.

Then there's increased investment. When oil prices are higher, less efficient vehicles get replaced faster, R&D for efficiency technologies takes off, and new companies are founded to meet emerging needs. Remember: the US economy's greatest competitive advantage is innovation. We excel at at. More so than any other country, we benefit from stressors and rapid change. High oil prices are that stressor, and we've reached a point where we should embrace it.

There's also the ever-improving fleet efficiency. As we squeeze more from each barrel, the price of oil matters less to us. At some point, the price of fuel will be less important to our economy than the profits we reap in world markets. If we haven't reached that point already, we certainly will in the near future when electric vehicles will be offered in most market segments.

Finally, there's the COL differential between Trump Country and the People's Republic of America. The Internet tells me gas is <$3.25/gallon in CA, and of course, everything is expensive there. I can see how the good comrades of CA would be struggling. Then again, that's why I don't live in CA. This morning, I drove past a local gas station at $2.40/gallon. When even luxury cars get 30+mpg and there are plenty of jobs near affordable housing, $2.40/gallon is irrelevant. Make it $3/gallon; let's get this technology & profits show on the road!

Seriously though: the US economy is reaching a point where consumers can survive higher oil prices, and we'll enjoy other benefits from those higher prices. I would expect to see the US government progressively less concerned about this issue.

JJCar
5 hours ago, mthebold said:

Whether the US wants higher or lower prices depends on the immediate circumstances.

I make this short. First when you say "Whether US wants higher or low prices . . . " Whom are you referring to when you say " . . US . . " ? Trump Administration ? US consumers ? US oil companies ? Politicians? What all of them should want is Free Market economics. Supply and Demand Market.

Stabil $50 bbl oil would create the world's largest economic boom ever. For ALL countries. Including emerging markets. Why fill the 22,000 Saudi Prices pickets with cash. . . get a job.

Edited 2 hours ago by JJCar
Wastral
5 hours ago, JJCar said:

I make this short.

First when you say "Wether US wants higher or low prices . . . "

Whom are you referring to when you say " . . US . . " ? Trump Administration ? US consumers ? US oil companies ? Politicians?

What all of them should want is Free Market economics.

Supply and Demand Market.

How ignorant to think the world runs on free market. Most of the world is closed dictatorships/oligarchies whom we have STUPIDLY allowed into our free market and then this statement is not true either, as the rest of "market driven economies", the EU have ~ no oil, so in effect would be a monopoly and DID act this way as the USA was the #1 DOMINANT oil producer in the world for its first 50 years. Oil has NEVER worked on free market principles.

For this reason it is one reason why Thorium salt water thermal reactors can NOT get funding outside of China. If anyone can get them to work, Coal, oil, NG, wind, solar, geothermal will disappear overnight. Why? EVERYONE has Thorium in their country. It is a waste product from nearly every single mining operation around the world. We were very close to getting them to work in the 70's but Nixon happened who hated any industry outside of S. California and cut anyones funding outside of this region to zero.

JJCar
3 hours ago, Wastral said:

How ignorant to think the world runs on free market. Most of the world is closed dictatorships/oligarchies whom we have STUPIDLY allowed into our free market and then this statement is not true either, as the rest of "market driven economies", the EU have ~ no oil, so in effect would be a monopoly and DID act this way as the USA was the #1 DOMINANT oil producer in the world for its first 50 years. Oil has NEVER worked on free market principles.

For this reason it is one reason why Thorium salt water thermal reactors can NOT get funding outside of China. If anyone can get them to work, Coal, oil, NG, wind, solar, geothermal will disappear overnight. Why? EVERYONE has Thorium in their country. It is a waste product from nearly every single mining operation around the world. We were very close to getting them to work in the 70's but Nixon happened who hated any industry outside of S. California and cut anyones funding outside of this region to zero.

I agree the World doesn't run on a free market. SAUDI's sold US Refiners $3.00 oil for $120.00 in 2006.

BUT THE U.S. RUNS ON A FREE MARKET ECONOMY.

PRICE FIXING IS AGAINST THE U.S. ANTI-TRUST LAWS AND SHOULD BE ENFORCED TO THE FULLEST.

As to your other point . . . . . I just bought a THORIUM SALT WATER THERMAL REACTOR AT HOME DEPOT LAST WEEK.

My other one just went on me. I had to take cold showers for three days until I could replace it.

Edited 2 hours ago by JJCar
Tupo
Fred czubba

Hello JC ,,,, as far as I know one of the leaders in the field of Thorium Reactor Technology is Moltex Energy. www.moltexenergy.com. it looks very promising and the Canadian Government is reviewing this technology at this time.Conceptually it looks pretty darn good.

CookieMonster
2 hours ago, Fred czubba said:

Hello JC ,,,, as far as I know one of the leaders in the field of Thorium Reactor Technology is Moltex Energy. www.moltexenergy.com. it looks very promising and the Canadian Government is reviewing this technology at this time.Conceptually it looks pretty darn good.

Lots of things look good, conceptually.

JJCar
2 hours ago, Fred czubba said:

Hello JC ,,,, as far as I know one of the leaders in the field of Thorium Reactor Technology is Moltex Energy. www.moltexenergy.com. it looks very promising and the Canadian Government is reviewing this technology at this time.Conceptually it looks pretty darn good.

A lot of things look good conceptually. They've been working on fusion reactors forever. I'm all for new technology . . . . but I wouldn't hold your breath.

I used to be pissed off when GE wouldn't bring to market that light bulb they invented that never burned out. . . . . Then there was the car Goodyear tire that lasted for 500,000 miles but never saw the light of day . . . Then . . .

Edited 1 hour ago by JJCar
Wastral
2 hours ago, JJCar said:

I agree the World doesn't run on a free market. SAUDI's sold US Refiners $3.00 oil for $120.00 in 2006.

BUT THE U.S. RUNS ON A FREE MARKET ECONOMY.

PRICE FIXING IS AGAINST THE U.S. ANTI-TRUST LAWS AND SHOULD BE ENFORCED TO THE FULLEST.

As to your other point . . . . . I just bought a THORIUM SALT WATER THERMAL REACTOR AT HOME DEPOT LAST WEEK.

My other one just went on me. I had to take cold showers for three days until I could replace it.

If the USA cared about price fixing, I agree we should, then we should be massively increasing tariffs on everyone.... actually I have argued for this, but for freedom reasons. WTO is the dumbest thing ever as it ACTIVELY works against freedom as it gives power to greedy power hungry oligarchs around the world.

[Mar 28, 2019] Trump sells out his base to please Wallstreet and Oil industry - Oil (General) - Oil Price Community

Mar 28, 2019 | community.oilprice.com

Started by JJCar , March 20 2019

oil price Sign in to follow this Followers 2

[Mar 26, 2019] New Fed stance is a life saver for shale

Notable quotes:
"... In the ongoing desire on their part to be transparent they have, until Wed., projected their expectations for increases to short-term rates over the next two years to be 4 increases this year and 4 next year. ..."
"... As of Wednesday, that's all gone. The new dot chart says zero increases this year and at most 1 next year. The 10-year treasury immediately cratered its yield to 2.5something percent. ..."
Mar 26, 2019 | peakoilbarrel.com

Watcher 03/24/2019 at 10:25 am

Re shale financing . . . Folks should go and read financial articles from Wednesday afternoon of this week.

The Fed basically took a sledgehammer to their dot charts. In the ongoing desire on their part to be transparent they have, until Wed., projected their expectations for increases to short-term rates over the next two years to be 4 increases this year and 4 next year.

As of Wednesday, that's all gone. The new dot chart says zero increases this year and at most 1 next year. The 10-year treasury immediately cratered its yield to 2.5something percent. Still falling. Overseas we see Germany tracking, and Japan, and more and more maturities on their yield curves return to negative. Not just real negative. Outright nominal negative.

This is something that Financial media does not talk about. Negative nominal interest rates from major country government bonds. How could they talk about it? It is utterly obvious that this specific reality demonstrates that the entirety of all analyses has no meaning. Their only defense is silence. Shale would prefer that it stay that way.

The Fed also announced an end to balance sheet normalization, which is euphemism for trying to get rid of all of those bonds and MBS that were purchased as part of QE. They are ending their purchases late this year. They dare not continue the move towards normal. I believe that leaves their balance sheet still holding in excess of 3 trillion. That's not normalization, sports fans. And it has been TEN YEARS.They havent been able to get to "normal" in ten years, and as of Wed, they will stop trying.

The Treasury notes are the underlying basis for what shale companies have to pay to borrow money. Thoughts by folks here that the monetary gravy train will shut off shale drilling need rethinking. Bernanke changed everything. Forever.

These Fed actions are indistinguishable from whimsy. Imagining that Powell is Peak Oil cognizant and is focused on shale is a tad extreme, but only a tad.

I recall a Bernanke quote during the crisis that made clear he knew what Peak would mean -- at any price.

[Mar 26, 2019] I don't believe Oil will fall much anymore. Oil prices were kept in check by the rising dollar. Now that the Fed is no longer hiking, and probably will be cutting rates soon, its likely Oil prices will start rising again.

Mar 26, 2019 | peakoilbarrel.com

TechGuy

says: 03/26/2019 at 11:37 am

"When US Equities are well on their way south US treasury yields will also join the negative club. But oil will also be $20"

I don't believe Oil will fall much anymore. Oil prices were kept in check by the rising dollar. Now that the Fed is no longer hiking, and probably will be cutting rates soon, its likely Oil prices will start rising again. I think we probably will see some short dips in energy and Stocks, but once the Fed cuts or does more QE, prices will climb back.

I've also noticed that prices for everything are going up. We are back in stagflation with falling labor demand, but rising costs: materials, Food, imports, etc. My wild ass guess is that WTI will be higher in Dec 2019 than it is today.

Its possible that the Fed is now trapped: Rising inflation, but failing labor demand. Prices will likely increase as unemployment increases. My guess is Fed will let Inflation go unchecked in order to avoid another major recession. If this assessment turns out to be correct, Holding cash in USD is going to losing strategy.

FWIW: I don't believe the number of job offerings reflect the real labor market. I think companies are keeping a lot of filled jobs posted due to extreme employee turn over rates. For instance retail job turnover rates are as high as 81% per year. Often worker quit after a few months or weeks. Thus it just makes sense for employers to keep the same jobs permanently listed, even if they have the position currently filled.

[Mar 26, 2019] $20 oil will CRUSH any exploration and development and NOBODY will spend a dollar on CAPEX.

Mar 26, 2019 | peakoilbarrel.com

Proteus x Ignored says: 03/24/2019 at 6:26 pm

$20 oil will CRUSH any exploration and development and NOBODY will spend a dollar on CAPEX.
No Questions Asked.
A short-term high for consumers but a worse cataclysm than 2015
I am in Central TX, (Bryan/College Station) and remember well the 1980's crash and of course 2015-18.
The offshore oil exploration company I work for here was saved by a TGS contract during that sh+t show.
We are now so swamped with jobs it is stupid.
Not enough boats or people worldwide- (NEW , unused fleets were cut up for scrap) and honestly a dozen people I personally know ( some family members) either retired or went to other technical fields.
They have all refused offers to come back .
Please remember, we are already 3 years behind on Explorati0n and Development and we are just starting to see the ramifications of that 3 year worldwide "vacation".
Oh, and IMO 2020 is rolling in. Not a problem for us as we have to use .5ppm diesel anyway .
Plus all the other Producer Countries with their own personal problems .
Yessir, gonna be a wild show.
I was /am no fan of Jimmy Carter but the world should have listened to him back in 1977.
That old grasshopper/ant fable comes to mind
A lot of lost years since then, would have been nice to develop alternates before it got scary.
But that is what Humans do
Silly creatures .
shallow sand x Ignored says: 03/24/2019 at 7:49 pm
Interesting how the service firms are all swamped yet are mostly on the brink of BK, based on how the shares are trading.
Boomer II x Ignored says: 03/24/2019 at 9:24 pm
I started to pay attention to oil during the Carter years. We could have had a very manageable transition to alternative options to oil if we had used those decades to plan for it.

Instead, we're going to have significantly more disruption when we can't keep our petroleum consumption at current levels.

[Mar 21, 2019] OPEC February Production Data " Peak Oil Barrel

Mar 21, 2019 | peakoilbarrel.com

HuntingtonBeach x Ignored says: 03/19/2019 at 1:20 am

"Perfect Storm" Drives Oil Prices Higher

"The latest Brent rally has brought prices to our peak forecast of $67.5/bbl, three months early," Goldman Sachs wrote in a note. The investment bank said that "resilient demand growth" and supply outages could push prices up to $70 per barrel in the near future. It's a perfect storm: "supply loses are exceeding our expectations, demand growth is beating low consensus expectations with technicals supportive and net long positioning still depressed," the bank said.

The outages in Venezuela could swamp the rebound in supply from Libya, Goldman noted. But the real surprise has been demand. At the end of 2018 and the start of this year, oil prices hit a bottom and concerns about global economic stability dominated the narrative. But, for now at least, demand has been solid. In January, demand grew by 1.55 million barrels per day (mb/d) year-on-year. "Gasoline in particular is surprising to the upside, helped by low prices, confirming our view that the weakness in cracks at the turn of the year was supply driven," Goldman noted. "This comforts us in our above consensus 1.45 mb/d [year-on-year] demand growth forecast."

https://oilprice.com/Energy/Energy-General/Perfect-Storm-Drives-Oil-Prices-Higher.html

[Mar 20, 2019] I am now of the opinion that 2018 will be the peak in crude oil production, not 2019 as I earlier predicted. Russia is slowing down and may have peaked

If so, economics will suffer and chances for Trump for re-election are much lower, of exist at all due to all his betrayals
In the fable of "The Boy Who Cried Wolf," the wolf actually arrives at the end. Never forget that. Peak oil will arrive. We don't know when, and we are not prepared for it.
Shale play without more borrowed money might be the next Venezuela. .
Mar 16, 2019 | peakoilbarrel.com

I am now of the opinion that 2018 will be the peak in crude oil production, not 2019 as I earlier predicted. Russia is slowing down and may have peaked. Canada is slowing down and Brazil is slowing down. OPEC likely peaked in 2016. It is all up to the USA. Can shale oil save us from peak oil?

OPEC + Russia + Canada, about 57% of world oil production.

Jeff says: 03/14/2019 at 1: 50 pm

"I am now of the opinion that 2018 will be the peak in crude oil production, not 2019 as I earlier predicted. Russia is slowing down and may have peaked. Canada is slowing down and Brazil is slowing down. OPEC likely peaked in 2016. It is all up to the USA. Can shale oil save us from peak oil?"

IEA´s Oil 2019 5y forecast has global conventional oil on a plateau, i.e. declines and growth match each other perfectly and net growth will come from LTO, NGL, biofuels and a small amount of other unconventional and "process gains".

Iran is ofc a jocker, since it can quickly add supply. Will be interesting to see how Trump will proceed.

Carlos Diaz x Ignored says: 03/14/2019 at 3:23 pm

I am quite original in my opinion about Peak Oil. I think it took place in late 2015. I will explain. If we define Peak Oil as the maximum in production over a certain period of time we will not know it has taken place for a long time, until we lose the hope of going above. That is not practical, as it might take years.

I prefer to define Peak Oil as the point in time when vigorous growth in oil production ended and we entered an undulating plateau when periods of slow growth and slow decline will alternate, affected by oil price and variable demand by economy until we reach terminal decline in production permanently abandoning the plateau towards lower oil production.

The 12-year rate of growth in C+C production took a big hit in late 2015 and has not recovered. The increase in 2 Mb since is just an anemic 2.5% over 3 years or 0.8% per year, and it keeps going down. This is plateau behavior since there was no economic crisis to blame. It will become negative when the economy sours.

Peak Oil has already arrived. We are not recognizing it because production still increases a little bit, but we are in Peak Oil mode. Oil production will decrease a lot more easily that it will increase over the next decade. The economy is going to be a real bitch.

Dennis Coyne x Ignored says: 03/14/2019 at 4:57 pm
Carlos Diaz,

Interesting thesis, keep in mind that the price of oil was relatively low from 2015 to 2018 because for much of the period there was an excess of oil stocks built up over the 2013 to 2015 period when output growth outpaced demand growth due to very high oil prices. Supply has been adequate to keep oil prices relatively low through March 2019 and US sanctions on Iran, political instability in Libya and Venezuela, and action by OPEC and several non-OPEC nations to restrict supply have resulted in slower growth in oil output.

Eventually World Petroleum stocks will fall to a level that will drive oil prices higher, there is very poor visibility for World Petroleum Stocks, so there may be a 6 to 12 month lag between petroleum stocks falling to critically low levels and market realization of that fact, by Sept to Dec 2019 this may be apparent and oil prices may spike (perhaps to $90/b by May 2020).

At that point we may start to see some higher investment levels with higher output coming 12 to 60 months later (some projects such as deep water and Arctic projects take a lot of time to become operational, there may be some OPEC projects that might be developed as well, there are also Canadian Oil sands projects that might be developed in a high oil price environment.

I define the peak as the highest 12 month centered average World C+C output, but it can be define many different ways.

Carlos Diaz x Ignored says: 03/14/2019 at 7:18 pm
So Dennis,

Our capability to store oil is very limited considering the volume being moved at any time from production to consumption. I understand that it is the marginal price of the last barrel of oil that sets the price for oil, but given the relatively inexpensive oil between 2015 and now, and the fact that we have not been in an economical crisis, what is according to you the cause that world oil production has grown so anemically these past three years?

Do you think that if oil had been at 20$/b as it used to be for decades the growth in consumption/production would have been significantly higher?

I'll give you a hint, with real negative interest rates and comparatively inexpensive oil most OECD economies are unable to grow robustly.

To me Peak Oil is an economical question, not a geological one. The geology just sets the cost of production (not the price) too high, making the operation uneconomical. It is the economy that becomes unable to pump more oil. That's why the beginning of Peak Oil can be placed at late 2015.

The economic system has three legs, cheap energy, demographic growth, and debt growth. All three are failing simultaneously so we are facing the perfect storm. Social unrest is the most likely consequence almost everywhere.

Dennis Coyne x Ignored says: 03/14/2019 at 9:20 pm
Carlos,

If prices are low that means there is plenty of oil supply relative to demand. It also means that some oil cannot be produced profitably, so oil companies invest less and oil output grows more slowly.

So you seem to have the story backwards. Low oil prices means low growth in supply.

So if oil prices were $20/b, oil supply would grow more slowly, we have had an oversupply of oil that ls what led to low oil prices. When oil prices increase, supply growth will ne higher. Evause profits will be higher and there will be more investment.

Carlos Diaz x Ignored says: 03/15/2019 at 5:03 am
No Dennis,

It is you who has it backwards, as you only see the issue from an oil price point of view, and oil price responds to supply and demand, and higher prices are an estimulus to higher production.

But there is a more important point of view, because oil is one of the main inputs of the economy. If the price of oil is sufficiently low it stimulates the economy. New businesses are created, more people go farther on vacation, and so on, increasing oil demand and oil production. If the price is sufficiently high it depresses the economy. A higher percentage of wealth is transferred from consumer countries to producing countries and consumer countries require more debt. During the 2010-2014 period high oil prices were sustained by the phenomenal push of the Chinese economy, while European and Japanese economies suffered enormously and their oil consumption depressed and hasn't fully recovered since.

In the long term it is the economy that pumps the oil, and that is what you cannot understand.

Oil limits → Oil cost → Oil Price ↔ Economy → Oil demand → Oil production

The economy decides when and how Peak Oil takes place. If you knew that you wouldn't bother with all those models.

And in my opinion the economy already decided in late 2015 when the drive to increase oil production to compensate for low oil prices couldn't be sustained.

Schinzy x Ignored says: 03/15/2019 at 11:18 am
Carlos,

Your reasoning is close to mine. See https://www.tse-fr.eu/publications/oil-cycle-dynamics-and-future-oil-price-scenarios .

Dennis Coyne x Ignored says: 03/15/2019 at 3:01 pm
Carlos,

Both supply and demand matter. I understand economics quite well thank you. You are correct that the economy is very important, it will determine oil prices to some degree especially on the demand side of the market. If one looks at the price of oil and economic growth or GDP, there is very little correlation.

The fact is the World economy grew quite nicely from 2011 to 2014 when oil prices averaged over $100/b.

There may be some point that high oil prices are a problem, apparently $100/b in 2014 US$ is below that price. Perhaps at $150/b your argument would be correct. Why would the economy need more oil when oil prices are low? The low price is a signal that there is too much oil being produced relative to the demand for oil.

I agree the economy will be a major factor in when peak oil occurs, but as most economists understand quite well, it is both supply and demand that will determine market prices for oil.

My models are based on the predictions of the geophysicists at the USGS (estimating TRR for tight oil) and the economists at the EIA (who attempt to predict future oil prices). Both predictions are used as inputs to the model along with past completion rates and well productivity and assumptions about potential future completion rates and future well productivity, bounded by the predictions of both the USGS and the EIA along with economic assumptions about well cost, royalties and taxes, transport costs, discount rate, and lease operating expenses.

Note that my results for economically recoverable resources are in line with the USGS TRR mean estimates and are somewhat lower when the economic assumptions are applied (ERR/TRR is roughly 0.85), the EIA AEO has economically recoverable tight oil resources at about 115% of the USGS mean TRR estimate. The main EIA estimate I use is their AEO reference oil price case (which may be too low with oil prices gradually rising to $110/b (2017$) by 2050.

Assumptions for Permian Basin are royalties and taxes 33% of wellhead revenue, transport cost $5/b, LOE=$2.3/b plus $15000/month, annual discount rate is 10%/year and well cost is $10 million, annual interest rate is 7.4%/year, annual inflation rate assumed to be 2.5%/year, income tax and revenue from natural gas and NGL are ignored all dollar costs in constant 2017 US$.

Mario C Vachon x Ignored says: 03/15/2019 at 6:39 pm
You do incredible work Dennis and I believe you are correct. Demand for oil is relatively inelastic which accounts for huge price swings when inventories get uncomfortably high or low. If supply doesn't keep up with our needs, price will rise to levels that will eventually create more supply and create switching into other energy sources which will reduce demand.
Carlos Diaz x Ignored says: 03/15/2019 at 6:57 pm

Why would the economy need more oil when oil prices are low? The low price is a signal that there is too much oil being produced relative to the demand for oil.

You don't seem to be aware of historical oil prices. For inflation adjusted oil prices since 1946 oil (WTI) spent:
27 years below $30
13 years at ~ $70
18 years at ~ $40
10 years at ~ $90
5 years at ~ $50
https://www.macrotrends.net/1369/crude-oil-price-history-chart
And the fastest growth in oil production took place precisely at the periods when oil was cheapest.

You simply cannot be more wrong about that.

And your models are based on a very big assumption, that the geology of the reserves is determinant for Peak Oil. It is not. There is plenty of oil in the world, but the extraction of most of it is unaffordable. The economy will decide (has decided) when Oil Peak takes place and what happens afterwards. Predictions/projections aren't worth a cent as usual. You could save yourself the trouble.

Dennis Coyne x Ignored says: 03/16/2019 at 7:33 am
Carlos,

I use both geophysics and economics, it is not one or the other it is both of these that will determine peak oil.

Of course oil prices have increased, the cheapest oil gets produced first and oil gradually gets more expensive as the marginal barrel produced to meet demand at the margin is more costly to produce.

Real Oil Prices do not correlate well with real economic growth and on a microeconomic level the price of oil will affect profits and willingness of oil companies to invest which in turn will affect future output. Demand will be a function of both economic output and efficiency improvements in the use of oil.

Dennis Coyne x Ignored says: 03/16/2019 at 7:34 am
Thanks Mario.
Dennis Coyne x Ignored says: 03/16/2019 at 10:49 am
Carlos,

Also keep in mind that during the 1945-1975 period economic growth rates were very high as population growth rates were very high and the World economy was expanding rapidly as population grew and the World rebuilt in the aftermath of World War 2. Oil was indeed plentiful and cheap over this period and output grew rapidly to meet expanding World demand for oil. The cheapness of the oil led to relatively inefficient use of the resource, as constraints in output became evident and more expensive offshore, Arctic oil were extracted oil prices increased and there was high volatility due to Wars in the Middle east and other political developments. Oil output (C+C) since 1982 has grown fairly steadily at about an 800 kb/d annual average each year, oil prices move up and down in response to anticipated oil stock movements and are volatile because these estimates are often incorrect (the World petroleum stock numbers are far from transparent.)

On average since the Iran/Iraq crash in output (1982-2017) World output has grown by about 1.2% per year and 800 kb/d per year on average, prices have risen or fallen when there was inadequate or excess stocks of petroleum, this pattern (prices adjusting to stock levels) is likely to continue.

There has been little change when we compare 1982 to 1999 to 1999-2017 (divide overall period of interest in half) for either percentage increase of absolute increase in output.

I would agree that severe shortages of oil supply relative to demand (likely apparent by 2030) is likely to lead to an economic crisis as oil prices rise to levels that the World economy cannot adjust to (my guess is that this level will be $165/b in 2018$). Potentially high oil prices might lead to faster adoption of alternative modes of transport that might avert a crisis, but that is too optimistic a scenario even for me. 🙂

HHH x Ignored says: 03/15/2019 at 9:44 pm
China will be in outright deflation soon enough. Economic stimulus is starting to fail in China. They can't fill the so called bathtub up fast enough to keep pace with the water draining out the bottom. So to speak.

Interest rates in China will soon be exactly where they are in Europe and Japan. Maybe lower.

In order to get oil to $90-$100 the value of the dollar is going to have to sink a little bit. In order to get oil to $140-$160 the dollar has to make a new all time low. Anybody predicting prices shooting up to $200 needs the dollar index to sink to 60 or below.

The reality is oil is going to $20. Because the rest of the world outside the US is failing. Dennis makes some nice graphs and charts and under his assumptions his charts and graphs are correct. But his assumptions aren't correct.

We got $20 oil and an economic depression coming.

Peak Oil is going to be deflationary as hell. Higher prices aren't in the cards even when a shortage actually shows up. We will get less supply at a lower price. Demand destruction is actually going to happen when economies and debt bubbles implode so we actually can't be totally sure we are ever going to see an actual shortage.

We could very well be producing 20-30% less oil than we do now and still not have a shortage.

Oh and EV's are going to have to compete with $20 oil not $150 oil.

Lightsout x Ignored says: 03/16/2019 at 6:25 am
You are assuming that the oil is priced in dollars there are moves underway that raise two fingers to that.

https://www.scmp.com/economy/china-economy/article/2174453/china-and-russia-look-ditch-dollar-new-payments-system-move

Dennis Coyne x Ignored says: 03/16/2019 at 7:41 am
HHH,

When do you expect the oil price to reach $20/b? We will have to see when this occurs.

It may come true when EVs and AVs have decimated demand for oil in 2050, but not before. EIA's oil price reference scenario from AEO 2019 below. That is a far more realistic prediction (though likely too low especially when peak oil arrives in 2025), oil prices from $100 to $160/b in 2018 US$ are more likely from 2023 to 2035 (for three year centered average Brent oil price).

Dennis Coyne x Ignored says: 03/16/2019 at 9:56 am
HHH,

My assumptions are based on USGS mean resource estimates and EIA oil price estimates, as well as BIS estimates for the World monetary and financial system.

Your assumption that oil prices are determined by exchange rates only is not borne out by historical evidence. Exchange rates are a minor, not a major determinant of oil prices.

HHH x Ignored says: 03/16/2019 at 6:50 pm
Dennis,

Technically speaking. The most relevant trendline on price chart currently comes off the lows of 2016/02/08. It intersects with 2017/06/19. You draw the trendline on out to where price is currently. Currently price is trying to backtest that trendline.

On a weekly price chart i'd say it touches the underside of that trendline sometime in April in the low 60's somewhere between $62-$66 kinda depends on when it arrives there time wise. The later it takes to arrive there the higher price will be. I've been trading well over 20 years can't tell you how many times i've seen price backtest a trendline after it's been broken. It's a very common occurrence. And i wouldn't short oil until after it does.

But back to your question. $20 oil what kind of timetable. My best guess is 2021-2022. Might happen 2020 or 2023. And FED can always step in and weaken the dollar. Fundamentally the only way oil doesn't sink to $20 is the FED finds a way to weaken the dollar.

But understand the FED is the only major CB that currently doesn't have the need to open up monetary policy. It's really the rest of the worlds CB ultra loose monetary policy which is going to drive oil to $20.

[Mar 18, 2019] Countries that have reported their January production

Mar 18, 2019 | peakoilbarrel.com

Energy News, says: 03/17/2019 at 2:49 am

Countries that have reported their January production (shown on the chart)
OPEC14 -822
Alberta -268
Mexico -87
Russian Federation -78
Brazil -60
Norway -48
Total -1,429 kb/day
Chart https://pbs.twimg.com/media/D12BlLBW0AEDR6G.png

So far for February: Russia, OPEC14, Norway
Total: -330 kb/day

Chart for December which includes the big increases from the USA
https://pbs.twimg.com/media/D12IDSNW0AE18u1.png

China crude oil production
February: 3,813 kb/day
Average 2018: 3,788 kb/day
https://pbs.twimg.com/media/D12PhtXWsAALxTw.png

[Mar 17, 2019] Oil Expected to Rally into Summer Rigzone

Mar 17, 2019 | www.rigzone.com

Merill Lynch expects oil to rally into the summer.

That's what Hootan Yazhari, head of global frontier markets equity research at Bank of America Merrill Lynch, revealed in a television interview with Bloomberg earlier this week.

"We think a number of factors will see the oil market tighten in the coming months and, as a result, as we head into the summer we should expect oil prices to have a seven-handle, maybe even higher depending on a number of other factors," Yazhari told Bloomberg in the interview.

Looking at oil price predictions for the year, the Merill Lynch representative highlighted in the interview that the company was sticking to its forecast of $70 per barrel.

"As things stand we're looking for $70. Just to put that into context, that's a $72 average from today onwards," Yazhari told Bloomberg.

Earlier this month, analysts at Fitch Solutions Macro Research (FSMR) lowered their average annual price forecast for Brent for 2019 . The analysts now forecast that Brent will average $73 per barrel this year, which marks a $2 decrease from their previous projection of $75 .

"We have adjusted down our forecast to reflect the softer start to the year, but our underlying bullish narrative is unchanged, with positive but slower global economic growth and supply management from OPEC," FSMR analysts stated in a report sent to Rigzone on March 4.

Brent will probably trade somewhere between $74 and $84 per barrel by year end, according to Fat Prophets' David Lennox, who expressed the view in a television interview with CNBC last month. Back in January, Wood Mackenzie forecasted that Brent will average $65 per barrel in 2019 .

[Mar 17, 2019] Exxon Hits the Brakes on $1.9B Project

Mar 17, 2019 | www.rigzone.com

(Bloomberg) -- Exxon Mobil Corp. is delaying a C$2.6 billion ($1.9 billion) oil-sands project in Canada by at least a year as the nation's energy industry grapples with a shortage of pipeline space and government-mandated production cuts.

Exxon's Canadian subsidiary, Imperial Oil Ltd., had originally planned to bring the 75,000-barrel-a-day Aspen project online in 2022, but is now slowing the pace of development at the site in northern Alberta. Any decision to resume normal activity will depend on future government actions and general market conditions, Imperial said Friday.

The delay is another blow to Canada's oil-sands industry, which suffered from record low prices last year after a wave of new production overwhelmed the region's pipeline capacity. That spurred the government of Alberta, where most oil-sands projects are located, to mandate production cuts to drain a glut of crude in storage and revive prices.

The move also reflects Exxon's increased focus on projects off Guyana's coast and in the Permian Basin in Texas. The company last week increased its target for Permian production to 1 million barrels a day by 2024 and expanded its estimate for the size of its Guyana discovery to 5.5 billion barrels.

New Risks

Imperial, which owns refineries that were benefiting from the cheaper feedstock, has been one of the loudest critics of the curtailment policy and cited the plan again in its explanation for the Aspen delay.

"We cannot invest billions of dollars on behalf of our shareholders given the uncertainty in the current business environment," Imperial Chief Executive Officer Rich Kruger said in a statement. "That said, our goal is to ensure the work we do this year will enable us to effectively and efficiently resume planned activity levels when the time is right."

Imperial hinted at a possible slowdown at Aspen last month, saying it was re-evaluating the project after the forced production cuts introduced new risks. The company also has said previously that the curtailment policy, by boosting Canadian heavy oil prices too high, has made shipping crude by rail uneconomical, forcing Imperial to dial back its rail shipments to almost nothing last month.

Imperial sanctioned the Aspen project in November. The operation would use an extraction method called a steam-assisted gravity drainage, in which steam is pumped underground to heat up sludgy oil-sands bitumen, allowing it to flow through another pipe to the surface.

Imperial was slated to spend about C$700 million on the project this year, and the extra free cash flow stemming from the delay may be used to buy back more shares, which would be a positive for the stock, Dennis Fong, an analyst at Cannaccord Genuity, said in a note.

Imperial rose 0.5 percent to C$36.95 at 10:20 a.m. in Toronto. Exxon fell 0.3 percent to $80.21 in New York.

To contact the reporter on this story: Kevin Orland in Calgary at korland@bloomberg.net To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net Joe Carroll

[Mar 16, 2019] Perhaps the level of Saudi oil production was unsustainable and they are really glad to officially have an excuse to cut back on production.

Mar 16, 2019 | peakoilbarrel.com

Ron Patterson

x Ignored says: 03/15/2019 at 6:22 am
.Saudi Arabia
Quota 10,311
.Feb. Production 10,087
.Difference -224

Saudi Arabia produced 224,000 barrels per day less than their quota. Did not anyone notice this and wonder why? The rest of OPEC was 179,000 barrels per day over their quota. Iraq was the largest violator being 121,000 bpd over their quota.

Also, Saudi Arabia was the absolute driving force behind these quota cuts implemented in January.

Baggen x Ignored says: 03/15/2019 at 7:24 am
Noticed, and you could argue that they are showing the way and taking the larger part of the burden since they want to be so nice to the rest of the opec members ;-).

Or perhaps the level they have been producing at is unsustainable and they are really glad to officially have an excuse to cut back on production.

Your take?

Ron Patterson x Ignored says: 03/15/2019 at 8:11 am
Or perhaps the level they have been producing at is unsustainable and they are really glad to officially have an excuse to cut back on production.

You nailed it. That's my take exactly.

[Mar 10, 2019] Oil Market About To Enter Supply Deficit

Mar 10, 2019 | finance.yahoo.com

• The OPEC+ cuts have likely already tipped the oil market into a supply deficit, according to Barclays.
• OECD inventories fell dramatically over the past two years, and came back to the five-year average in 2018, where they have mostly remained.
• The OPEC+ cuts quickly headed off a renewed surplus, and will likely drain inventories over the course of this year. Inventories are set to fall below the five-year average.
• Still, Barclays says the market return to balance or even a small surplus in the second half of 2019.

2. China's oil demand not collapsing

<img src="https://s.yimg.com/it/api/res/1.2/.fxgVesli1gE.apMTKU4BQ--~A/YXBwaWQ9eW5ld3M7c209MTt3PTQ1MTtoPTMxNg--/http://media.zenfs.com/en-US/homerun/oilprice.com/43a64118adc9d08dff397f7e71a52626" itemprop="url"/>

• Some of the more catastrophic oil forecasts for 2019 centered on a sharp slowdown in Chinese demand.
• China's car sales actually contracted year-on-year over the last few months, and car sales could continue to fall this year.
• But China's demand, while slowing relative to years past, is still expected to grow by 0.5 mb/d in 2019, according to Barclays, the same rate of expansion as 2018.
• Next year, however, China's demand growth could slow a bit more, dipping below 0.4 mb/d, continuing a gradual deceleration in demand growth.

[Mar 02, 2019] Saudi Arabia Oil Exports To U.S. Nosedive

Mar 02, 2019 | oilprice.com

OilPrice.com

Saudi Arabia's crude oil exports to U.S. are falling sharply, with shipments so far this month at just 1.6 million barrels, according to data compiled by Bloomberg , versus 5.75 million barrels a year ago.

For the whole of January, Saudi Arabia exported just 2.69 million barrels of crude to the United States. The decline follows Saudi Arabia's decision to cut its crude oil production -- primarily heavy crude grades -- by more than it agreed to at the December OPEC+ meeting as it seeks higher oil prices.

One analyst told Bloomberg oil exports from the Kingdom to U.S. refiners could even fall to zero but that was unlikely to happen.

"We could see Saudi oil imports declining to zero into the U.S. Gulf Coast," Andy Lipow from Lipow Oil Associates said. "OPEC and non-OPEC members feel prices are too low, and they will do what it takes to put the market back in balance."

[Mar 02, 2019] EIA's Data for World and Non-OPEC Oil Production " Peak Oil Barrel

Mar 02, 2019 | peakoilbarrel.com

Energy News x Ignored says: 02/27/2019 at 10:36 am

Big draw -17.9 million barrels including LPG

U.S. Petroleum Balance Sheet
Crude oil stocks down -8.6 million barrels
Crude oil exports over 3 million barrels per day again
Crude oil imports lowest since 1996, Bloomberg chart: https://pbs.twimg.com/media/D0bD6v5X4AEpx6R.jpg
EIA pdf file: http://ir.eia.gov/wpsr/overview.pdf

Oil import by country, Saxo Bank chart https://pbs.twimg.com/media/D0bGhyRXcAAUdDO.jpg
Oilytics chart summary https://pbs.twimg.com/media/D0bG34CWwAAQ1TS.jpg

[Mar 02, 2019] Peak Oil Explained

Mar 02, 2019 | www.zerohedge.com

-- ALIEN -- , 15 hours ago link

Peak Oil Explained

Peak oil is the simplest label for the problem of energy resource depletion, or more specifically, the peak in global oil production.

Oil is a finite, non-renewable resource, one that has powered phenomenal economic and population growth over the last century and a half.

The rate of oil 'production', meaning extraction and refining (currently about 85 million barrels/day), has grown almost every year of the last century.

Once we have used up about half of the original reserves, oil production becomes ever more likely stop growing and begin a terminal decline, hence 'peak'.

The peak in oil production does not signify 'running out of oil', but it does mean the end of cheap oil, as we switch from a buyers' to a sellers' market.

For economies leveraged on ever increasing quantities of cheap oil, the consequences may be dire.

Without significant successful cultural reform, severe economic and social consequences seem inevitable.

Keep reading at...

https://www.resilience.org/primer/

KimAsa , 22 hours ago link

There's no doubt that economies suffer under high energy prices. Recently POTUS acknowledged this when he said oil is too damn high.

Oil producers (frackers) have to be profitable and they just aren't. It seems to unclear what the break even point is for fracking operations in the US, but let's say $50 per barrel goes to production costs. That doesn't leave much room. If oil is selling for less than that on the open market, the frackers are forced to finance their operations. This can't go on. Clearly the cheap oil era has peaked.

[Mar 01, 2019] The next point is that the world is not running out of oil yet, but potential oil reserves are not under western control (most potential reserves are in Africa, Middle East, Ex USSR countries and the Arctic). And that makes for an unstable political future between the west and the rest of the world

Globalization was fueled by cheap oil. end of cheap oil means the end of globalization.
It looks like people started to notice the "gangster capitalism" nature of Trump administration.
If also raises the speculation that the end of "cheap oil" might signify the end of neoliberalism as a social system. At least the "classic" version. Whether Trump inspired the evolution of neoliberalism into "national neoliberalism" improves the survival chances of this social system remains to be seen.
Notable quotes:
"... The whole "political play" going on now seems to be Trump pressuring Saudi Arabia (and OPEC) for the assumable extensive spare capacity that they have. But the problem is, the reality is high oil prices were needed to avoid a deficit in the whole scheme of things. I still guess reality will be hard late 2019/20 as has always been my prediction. ..."
"... To avoid blackmail when it comes to oil the future; sooner or later there is going to be a transition to natural gas (for some decades) and renewable in the West and Asia first. That is how the story goes in my view. The transition to renewable is most likely not going to be smooth, but hurt someone (some part of the population and some countries maybe). Interesting future energy and other resources (e.g lithium, cobalt, nickel and rare magnet ingredients needed for batteries) are going to be even more in focus than today I guess. ..."
Mar 01, 2019 | peakoilbarrel.com

kolbeinh says: 03/01/2019 at 5:58 pm

I think there are a lot of people that need a delusion check. Because a surplus of oil is advocated by "western trustable sources" against the natural investment circle of the oil industry does not automatically mean that the market balance is under control; it is in fact never going to work.

The whole "political play" going on now seems to be Trump pressuring Saudi Arabia (and OPEC) for the assumable extensive spare capacity that they have. But the problem is, the reality is high oil prices were needed to avoid a deficit in the whole scheme of things. I still guess reality will be hard late 2019/20 as has always been my prediction.

It is difficult to change my mind about the oil market; after all it is not supersonic speed in this mature market. The digitalisation of data gathering (seismic and reservoir control) together with horizontal wells represent probably huge gains and I would guess alone can explain why for example Russia has been doing so well the last decade.

The next point is that the world is not running out of oil yet, but potential oil reserves are not under western control (most potential reserves are in Africa, Middle East, Ex USSR countries and the Arctic). And that makes for an unstable political future between the west and the rest of the world.

To avoid blackmail when it comes to oil the future; sooner or later there is going to be a transition to natural gas (for some decades) and renewable in the West and Asia first. That is how the story goes in my view. The transition to renewable is most likely not going to be smooth, but hurt someone (some part of the population and some countries maybe). Interesting future energy and other resources (e.g lithium, cobalt, nickel and rare magnet ingredients needed for batteries) are going to be even more in focus than today I guess.

[Feb 27, 2019] Wall Street Loses Faith In Shale

Feb 26, 2019 | www.zerohedge.com
Authored by Nick Cunningham via Oilprice.com,

To Wall Street, the shale industry has lost a lot of its allure. A decade's worth of promises have failed to materialize, and Big Finance is cutting some of its ties with smaller shale drillers who have not delivered.

The Wall Street Journal reports that the shale industry only saw $22 billion in new bond and equity deals, down by more than half from 2016 levels, which was a much worse time for the market.

The steep decline in new debt and equity issuance is a sign that major investors are no longer rushing to finance unprofitable shale drilling. It's worth noting that this is a new development. For years Wall Street financed unprofitable drilling, holding out on the promise that rapid production growth would eventually pay off.

Shale wells suffer from precipitous decline rates, with as much as three quarters of a well's total lifetime production coming out in the first year or two. After an initial burst of output, shale wells enter a steep decline.

Of course, this has been known since the beginning and Wall Street has long been fully aware. But major investors hoped that shale companies would scale up, achieve efficiencies and lower breakeven prices to the point that they could turn a profit.

Howe