Tag: saudi arabia

Unprecedented Oil Glut Appears Inevitable

Posted on by Robert Boslego

The U.S. has voiced its concerns over the Saudi-Russian oil price war, but thus far, those concerns appear to have fallen on deaf ears. In an interview that was broadcast on CNBC, Senator Ted Cruz (R-TX) answer the question, “Do you think President Trump should try to use his influence with Russia or Saudi Arabia to try to get them to stop producing so much oil?”

“Absolutely. I think that is a major priority especially for my home state of Texas. And if you look what happened, right in the midst of the coronavirus crisis, a public health crisis that is dominating our focus, and an economic crisis that is flowing from it. Millions of people losing their jobs.

“The Saudis and Russians decided to take advantage of that crisis by flooding the market and driving the price of oil way, way down. And that was opportunistic. It was designed with a very specific purpose. The Saudis are trying to drive out of business American producers, and in particular shale producers, largely in the Permian Basin in Texas, North Dakota and in a number of oil producing states across the country.

“That behavior I think is wrong. I think it is taking advantage of a country that is a friend.

“A couple of weeks ago, I joined with thirteen senators in a letter to the Saudi Ambassador to pull back and stop trying to drive the price down to artificially low. Nine of the thirteen did a conference call with Saudi Ambassador that was as candid a call and direct a call as I’ve ever had with a foreign leader. The nine of us unloaded on her. And their defense was but Russia is doing this.

“I said but Russia is not our friend. We treat them accordingly. We are aware of their Continue reading "Unprecedented Oil Glut Appears Inevitable" →

Oil Market Readies For Iran Sanction Waivers, Round 2

Posted on by Robert Boslego

Crude oil production in Iran had reached 3.84 million barrels per day (mmbd) in the period following the lifting of sanctions by the Obama Administration. But following President Trump’s announcement in May 2018 that the U.S. would re-impose sanctions in November, demand for Iranian crude dropped to 3.7 mmbd by October. In November, the Trump Administration allowed limited waivers to the sanctions to eight countries, but Iranian production dropped by another 700,000 b/d by March.

The waivers were designed to terminate on May 2nd, but Secretary of State Mike Pompeo announced April 22nd that the waivers would not be extended. "This decision is intended to bring Iran's oil exports to zero, denying the regime its principal source of revenue," the White House said in a statement.

According to the International Energy Agency (IEA), Iran’s exports of crude and condensates are running about 1.1 mmbd in April. President Trump tweeted Saudi Arabia and others in OPEC had assured him that they would make up the impact of any decline in Iran’s exports:

Iran

In the months leading up to last November, KSA had increased its output to 11.1 mmbd, at the request of the White House, to ensure that oil supplies would be adequate once the Iranian sanctions took effect in November. But Trump’s granting of the waivers immediately created an oversupply in the global oil market, and oil prices collapsed as a result. Continue reading "Oil Market Readies For Iran Sanction Waivers, Round 2" →

OPEC's Plan To Institutionalize OPEC+ Has Failed

Posted on by Robert Boslego

For over a year, OPEC General Secretary Mohammed Barkindo has been trying to "institutionalize" the OPEC+ arrangement that includes Russia. At the Oil and Money conference in October 2017 in London, Barkindo told reporters. "This platform of 24 countries, now hopefully growing, should be institutionalized."

OPEC+
Source: OPEC

In September, he said, "What we are working on now is to make it [cooperation] more permanent and institutionalize the framework. Our target is to have a longer cooperation framework in place by December when we reconvene in Vienna [for the next OPEC meeting]."

In an interview with TASS on October 22nd, Saudi Energy Minister Khalid Al-Falih explained his view for the long-term agreement he wanted in December: Continue reading "OPEC's Plan To Institutionalize OPEC+ Has Failed" →

Saudi Crown Prince Claims Lost Iranian Barrels Will Be Offset

Posted on by Robert Boslego

Back in 1973, Saudi Arabia took a very aggressive move against the U.S. by starting the Arab oil embargo:

Saudi Crown Prince

But the Trump Administration has taken a strong position against Iran, Saudi Arabia’s nemesis. KSA also depends on the U.S. for its protection as well as its economic development. The current relationship between Washington and Riyadh could not be better:

"I love working with him (Trump)." - Crown Prince Mohammed bin Salman, October 5, 2018

Saudi Crown Prince
Photo Courtesy Of AFP)

Prior to announcing the U.S. pull-out of the Iranian nuclear deal in May, the White House had secured assurances from producers, namely Saudi Arabia, that any disruptions in Iran’s exports would be offset by higher production by countries with spare capacity, according to Treasury Secretary Mnuchin. The Saudi energy minister confirmed it. Continue reading "Saudi Crown Prince Claims Lost Iranian Barrels Will Be Offset" →

Oil Price Spike Will Most Likely Be Averted

Posted on by Robert Boslego

Uncertainties for the balance of 2018 imply that stocks could fall sharply or be adequate. As a result, prices may spike or drop into the $50s, depending on what unfolds.

President Trump has sway over Saudi Arabia and the other Gulf producers. He can also fine-tune the implementation of sanctions on Iran and waivers to them. I’m expecting he will do whatever he has to, to avert a price spike going into the November mid-term elections.

July Production Changes

OPEC estimated in its August Monthly Oil Market Report (MOMR) that its crude production in July averaged 32.323 million barrels per day (mmbd). That was about 40,000 b/d higher than in June. The “compliance” level with the 2016 deal dropped to 97%, the first time less than 100% in nearly a year.

Saudi Arabia’s production was reduced by about 52,000 b/d, but that was more than offset by gains of 79,000 b/d in Kuwait and 69,000 b/d in the UAE.

Iran’s production fell by 56,000 b/d while Venezuela’s output dropped 48,000 b/d. Libya’s output also dropped by 57,000 b/d. Continue reading "Oil Price Spike Will Most Likely Be Averted" →