Energy Prospectus

On May 31 Reuters reported Saudi Arabia's King Salman told an emergency Arab summit on Friday that decisive action was needed to stop Iranian "escalations" following attacks on Gulf oil assets, as U.S. officials said a military deployment had deterred Tehran. The right of Saudi Arabia and the United Arab Emirates to defend their interests after the attacks on oil pumping stations in the kingdom and tankers off the UAE were supported in a Gulf Arab statement and a separate communique issued after the wider summit.

On May 30 Reuters reported the United States will sanction any country which buys oil from Iran after the expiration of waivers, U.S. Special Representative for Iran Brian Hook said on Thursday. Sanctions would be imposed "even if a country had not met its previously negotiated purchase caps," Hook said in a statement. "Our firm policy is to completely zero out purchases of Iranian oil. Period."

On May 31 Reuters reported top oil exporter Saudi Arabia has raised production in May, a Reuters survey found, but not by enough to compensate for lower Iranian exports which collapsed after the United States tightened the screw on Tehran. The 14-member OPEC pumped 30.17 million b/d in May, the survey showed, down 60,000 b/d from April and the lowest OPEC total since 2015, the Reuters survey showed. The survey suggests that even though Saudi Arabia is raising output following pressure from U.S. President Donald Trump to bring down prices, the kingdom is still voluntarily pumping less than an OPEC-led supply deal in place this year allows it to.

Marshall Atkins, the head of Raymond James' energy sector team, has published a new report this morning (June 3, 2019) in which he suggests that (contrary to Trump's tweets) the rising oil prices (back to a reasonable level of $65 to $75 per barrel) will actually be good for the U.S. economy. If you'd like to read the full report, send me an email ( dmsteffens@comcast.net ). Here is a small part of the report:

"There are several reasons why we think the U.S. impact from rising oil prices "is different this time" including: 1) Over the past decade, U.S. oil
and gas production has seen massive growth and sharp cost reductions to now become the world's largest and cheapest incremental energy
provider, 2) the U.S. energy driven trade deficit has transitioned from nearly $1 billion per day drag on our economy a decade ago to a mild surplus
today, 3) cheap energy sources (especially natural gas and NGL's) have given U.S. energy intensive consumers a BIG cost advantage over the rest
of the world driving U.S. expansion in these industries, and 4) the extremely capital intensive energy sector drives outsized demand for supporting
machinery, steel, transportation, and petrochemicals. Bottom line: This time is different for the relationship between oil prices and the U.S.
economy vs. the past half century. In this week's Stat, we will explore this structural change in more detail."

"One of the most obvious reasons that historical perceptions regarding the negative impact of higher oil prices on the U.S. economy stems from the
fact that, over the past decade, the United States has transitioned from a massive importer of total petroleum products to a net exporter
today! In fact, the U.S. is on track to a become a net liquids exporter within the next couple of years."