The overall market and WTI were down big this morning as it over-reacted (IMO) to a "Trump Tweet" about doubling tariffs on China if they don't move quickly to reach an agreement on terms that the U.S. Treasury Secretary thinks we have in principle. Eventually this "Tariff War" will get resolved and when it does all commodities should move higher.
WTI and the market rebounded in the afternoon. WTI hit a low of $60.04 this morning and then closed at $62.54, up $0.60/bbl on the day. The roller-coaster ride will continue.
Tensions between Iran and the U.S. are heating up.
Reuters:
Iran will restart part of its halted nuclear program in response to the U.S. withdrawal from a landmark 2015 nuclear deal, but does not itself plan to pull out of the agreement, the state-run IRIB news agency reported on Monday. Citing a source close to an official commission which oversees the nuclear deal, IRIB reported that President Hassan Rouhani would announce that Iran would reduce some of its "minor and general" commitments under the deal on May 8- exactly one year after U.S. President Donald Trump announced the U.S. pullout.
Trump subsequently reimposed tough sanctions on Iran, including on its lifeblood oil exports with the stated intent of reducing them to zero and starving Iran's economy.
"The Islamic Republic of Iran in reaction to the exit of America from the nuclear deal and the bad promises of European countries in carrying out their obligations will restart a part of the nuclear activities which were stopped under the framework of the nuclear deal," the source said, according to IRIB.
Similarly, the semi-official Iranian Students' News Agency (ISNA) reported that Iran on Wednesday will announce "reciprocal actions" to the U.S. withdrawal from the nuclear deal, quoting "knowledgeable sources."
Some European Union leaders had been unofficially told of Iran's decision, the report said.
The Trump administration is now deploying a carrier strike group and bombers to the Middle East in response to troubling "indications and warnings" from Iran and to show the United States will retaliate with "unrelenting force" to any attack, U.S. national security adviser John Bolton said on Sunday.
Bolton - who has spearheaded an increasingly hawkish U.S. policy on Iran - said the decision, which could exacerbate tensions between the two countries, was meant to send a “clear and unmistakable message” of U.S. resolve to Tehran.
U.S. Secretary of State Mike Pompeo also issued a warning to the Islamic Republic on Sunday.
"It is absolutely the case that we have seen escalatory actions from the Iranians and it is equally the case that we will hold the Iranians accountable for attacks on American interests," Pompeo told reporters aboard a flight en route to an Arctic Council meeting in Finland.
If these actions take place, if they do by some third-party proxy, a militia group, Hezbollah, we will hold the Iranian leadership directly accountable for that.”
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MY TAKE: If Iran makes any moves to close the Strait of Hormuz or attacks tankers at the entrance to the Red Sea (from Yemen), the U.S. will respond with force and oil may move a lot higher. The recent rocket attack by Hamas on Israel was backed by Iran.
Oil Price - May 6
Oil Price - May 6
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - May 6
Occidental ups its cash offer for Anadarko . New York Times .
Occidental Petroleum fortified its bid for Anadarko Petroleum on Sunday night with more cash in its latest effort to outbid Chevron and win the support of Anadarko’s shareholders who may well make the final decision on a merger. In a letter to Anadarko’s board of directors, Occidental’s cash-and-stock proposal remained at $76 per share, or $38 billion. But the cash portion was raised to 78 percent from 50 percent. Chevron may now raise its bid, but it did not have an immediate comment on Occidental’s new move. Vicki Hollub, Occidental’s chief executive, said her company’s proposal represented a 23.3 percent premium over Chevron’s bid. “The significantly increased cash component provides value,” she wrote in the letter to Anadarko. “We hope we can execute this merger agreement without delay and proceed to bringing this exciting combination to fruition.” The proposal came only hours after Occidental announced that if it does acquire Anadarko it will sell off a slew of Anadarko investments across Africa in a move that would allow it to focus its efforts on dominating the oil field straddling Texas and New Mexico that is the biggest and most productive in the United States.
Occidental Petroleum fortified its bid for Anadarko Petroleum on Sunday night with more cash in its latest effort to outbid Chevron and win the support of Anadarko’s shareholders who may well make the final decision on a merger. In a letter to Anadarko’s board of directors, Occidental’s cash-and-stock proposal remained at $76 per share, or $38 billion. But the cash portion was raised to 78 percent from 50 percent. Chevron may now raise its bid, but it did not have an immediate comment on Occidental’s new move. Vicki Hollub, Occidental’s chief executive, said her company’s proposal represented a 23.3 percent premium over Chevron’s bid. “The significantly increased cash component provides value,” she wrote in the letter to Anadarko. “We hope we can execute this merger agreement without delay and proceed to bringing this exciting combination to fruition.” The proposal came only hours after Occidental announced that if it does acquire Anadarko it will sell off a slew of Anadarko investments across Africa in a move that would allow it to focus its efforts on dominating the oil field straddling Texas and New Mexico that is the biggest and most productive in the United States.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group