Oil Price War - Mar 31

[dan_s]

U.S. set to lose title as top oil producer as demand plunges and gas drops below $1 per gallon . NBC .
The oil market is in free fall, with one benchmark price hovering around $20 a barrel, and the national average price of gas dipping below $2 a gallon — a 16-year low. Daniel Yergin, vice chairman of IHS Markit, told CNBC on Monday that April could see an “unprecedented” drop in global demand of 20 million barrels a day. “We’re going to see a major decline in U.S. production,” he said. This will do significant, and probably lasting, damage to the American oil industry, which has grown in recent years due to an increase in shale extraction, making the U.S. the world’s top oil producer. “Crude oil prices under $30 a barrel aren't enough to sustain shale production in North Dakota and Texas,” said Andrew Lipow, president of Lipow Oil Associates. “We’re going to see an increase in consolidation and bankruptcies in the oil patch.” The shale expansion has been largely financed by high-yield debt from private equity lenders that don’t have the patience for sustained losses. “They're not willing to invest additional funds in an industry that’s under such significant pressure,” Lipow said. Combined with cutbacks in production capital expenditures by big multinational oil companies, the drop in U.S. oil output — roughly 13 million barrels a day at the beginning of the year — will likely knock it off its perch atop the list of oil-producing countries. < My WAG: U.S. oil production will decline 1.5 to 2.5 million barrels per day from March 31, 2020 to March 31, 2021.

Trump and Putin discuss price war with no deal in sight . E&E News .
President Trump talked yesterday with Russian President Vladimir Putin in an effort to convince him to bring to an end a global price war that's crippling U.S. oil producers. The call came days after Secretary of State Mike Pompeo talked with Saudi Crown Prince Mohammed bin Salman, telling him the kingdom has a "real opportunity to rise to the occasion and reassure global energy and financial markets." But analysts say that despite the stepped-up engagement, there may be no easy resolution to the situation because the United States doesn't have the leverage and neither of the countries has much of an incentive to reverse course. The White House said after the call that Trump and Putin "agreed on the importance of stability in global energy markets." Yet the Kremlin, which said the call was initiated by the United States, didn't go that far. It said the two presidents "exchanged views on the current state of the global oil market and agreed that Russian and American energy ministers should hold consultations on this topic." The call came as U.S. producers are exasperated by the situation and as Trump allies in energy-producing states increase pressure on the administration to take action. "It's essential that the U.S. engage," said Jeff Kupfer, who served as an acting deputy secretary and chief operating officer at the Department of Energy under President George W. Bush. "I'm all for the president on engaging in this and trying to end up with a reasonable solution."

Tariffs on imported oil: A bad idea at the wrong time . The Hill . Opinion.
As the nation tackles this unprecedented pandemic, it’s encouraging that Congress is pulling out all the stops to assist needy Americans and to deal with the economic fallout. But that doesn’t mean that every idea promoted by legislators is a good one. A Senate proposal to slap tariffs on oil imported from Saudi Arabia and Russia fits squarely into that description. The recent decision by these two countries to increase their oil production at the same time that demand fell off a cliff has resulted in an extremely difficult situation for U.S. producers. It’s understandable that policymakers would want to help — and there is a short-term allure of protectionist measures. Yet, as we have seen time and again, tariffs would ultimately hurt U.S. businesses and consumers. And in this specific instance, they would complicate America’s hard-won status as an energy superpower. On March 20th, a group of senators led by Jim Inhofe (R-Okla.) wrote to Commerce Secretary Wilbur Ross, urging him to investigate Saudi Arabia and Russia for dumping crude oil into the U.S. and to consider “all of your authorities” in response. Sen. Inhofe then clarified in media interviews that he wants the Trump administration to impose tariffs under Section 232 of the 1962 Trade Expansion Act, a provision that allows the president to impose punitive tariffs for national security reasons.

Ted Cruz, other senators, warn Saudis to stop using oil in ‘economic warfare’ against the US . CNBC .
Sen. Ted Cruz told CNBC on Monday he and eight other GOP senators recently ripped into the Saudi ambassador in a conference call over the oil price war with Russia that has threatened to put American producers out of business. In a “Squawk Box” interview, Cruz said the call with Princess Reema bint Bandar bin Sultan bin Abdulaziz Al Saud was “as candid a call, and direct a call, as I’ve ever had with a foreign leader.” “We quite frankly unloaded on her,” the Texas Republican said. Oil prices have plummeted as Saudi Arabia and Russia remain locked in a price war that began after Russia earlier this month rejected an additional 1.5 million barrels per day production cut proposed by OPEC. U.S. West Texas Intermediate crude briefly dipped below $20 on Monday. Brent, the international benchmark, fell to its lowest price in nearly 18 years. Following Russia’s rejection, Saudi Arabia slashed its official oil price and announced that it will increase production to 12.3 million barrels per day when the current production cuts expire at the end of March. Tanking prices have made it unprofitable for many U.S. firms to to remain active, analysts have said. Cruz said the senators warned that they would take action against Saudi Arabia if the “economic warfare” continued, though he did not mention any specific retaliatory measure.