Oil Price Outlook - a note from Mike

[dan_s]

Mike born in Iran; former oil buyer for Holly Frontier refinery; lives 11 months of year in Middle East.

Update on Iran and Libya.

· Inflation is very high. A dollar buys 2.5 times more local currency now

· Big sanctions start in November. Iran could lose production of over 1 MB/D causing more loss of jobs

· South Korea and Japan will be given exemptions from sanctions to buy Iran oil

· Iran will threaten sinking ship in Strait of Hormuz to block oil, but they will NOT because retaliation would be too great

· Small cities already rioting because of lack of jobs; middle city riots will start in next 6 months; big city riots start in 1 year

· Iranian leaders realize they are in a weak position with Trump versus Obama

· Money sent by Obama to Iran did NOT go to people, but to corruption

· Libya controlled by several tribes all fighting for oil. Therefore, consistency of oil production is questionable.

· Angola has similar internal fighting problems to Libya that could affect their production, but not as bad

Mike thinks oil prices will stay above $65 unless worldwide recession. There has not been any major fields discovered for 10 years. Exxon and Norway found a major field, but it will take time to develop. Therefore, as world population and middle class grow and want more cars, demand will continue to grow putting upward pressure on price. Oil could easily get to $80.