Oil Supply / Demand
Posted: Thu Jan 08, 2015 3:08 pm
I've gotten several e-mails that imply that the U.S. is the only nation that will move to balance supply & demand. That is not the case. Today's low oil prices will result in lower supply all over the world. Plus, lower fuel prices are a HUGE stimulus to the economies of the consuming nations so demand is going up. - Dan
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North America’s Operations not the Only Casualty (Full article: http://www.oilandgas360.com/oil-prices- ... f-26401157 )
Saudi Arabia’s price reduction is not a uniform idea within the Organization of Petroleum Exporting Countries (OPEC). In fact, some of the cartel members, including Venezuela and Algeria, have publicly called on the kingdom to raise prices back to the $100+ level we saw in the summer. “OPEC, as a cartel, is pretty much broken,” said Francisco Blanch, head of global commodities for Bank of America, in an interview with Bloomberg. “This is a long term game for the Saudis,” he added, saying OPEC members are currently producing with their sole respective interests in mind.
The strain of Saudi oil extends far past United States shale and smaller OPEC members. The kingdom is implementing great pressure on its longtime rivals of Russia and Iran, both of whom currently have a hand tied behind their backs due to Western sanctions. Iranian officials made some terse comments regarding the Saudis in recent parliament sessions. Amir Mousavi, a former IRGC diplomat and director of Iran’s Center for Strategic and International Studies, recently warned, “Saudi Arabia’s move is a suicidal step in the struggle against Iran in the region.”
Iran plans on cutting its oil exports to 1 MMBOPD, according to the country’s oil minister. The nation produced 2.77 MMBOPD in December 2014.
Russia, meanwhile, is undeterred by sanctions and produced a post-Soviet record of 10,667 MMBOPD in December. Russia’s oil minister expects output to be maintained and believes oil prices will eventually recover. The Saudis themselves had tough words for Russia, with Saudi oil minister Ali al-Naimi telling The Financial Times that Russia “doesn’t deserve a market share.”
Putin and Russia have stayed the course, finding alternatives to its sanctions by finding new trading partners. A landmark deal with China was finalized in November and involves moving 2.4 Tcf per year for the next 38 years at a price of $9.92 to $11.33 per Mcf. In his annual press conference, Putin assured his countrymen that “A positive turn and emergence from the current situation are inevitable,” even though the ruble has fallen 45% against the dollar since sanctions were first imposed. China has offered additional financial assistance for Russia if necessary.
During a speech given at Columbia University today, January 7, 2015, former Russian Deputy Minister of Energy and founder of the Institute of Energy Policy, Vladimir Milov, said that he thought Russia was on a dangerous path. “This year will be the first when we start to experience significant decline. The situation is still manageable, but the people in power [in Russia] make one systemic mistake after another.”
Naimi and the Saudis are offering no relief in the price slide, even if producers outside OPEC want to coordinate a production cut. “If they want to cut production they are welcome,” he said. “Certainly Saudi Arabia is not going to cut.”
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North America’s Operations not the Only Casualty (Full article: http://www.oilandgas360.com/oil-prices- ... f-26401157 )
Saudi Arabia’s price reduction is not a uniform idea within the Organization of Petroleum Exporting Countries (OPEC). In fact, some of the cartel members, including Venezuela and Algeria, have publicly called on the kingdom to raise prices back to the $100+ level we saw in the summer. “OPEC, as a cartel, is pretty much broken,” said Francisco Blanch, head of global commodities for Bank of America, in an interview with Bloomberg. “This is a long term game for the Saudis,” he added, saying OPEC members are currently producing with their sole respective interests in mind.
The strain of Saudi oil extends far past United States shale and smaller OPEC members. The kingdom is implementing great pressure on its longtime rivals of Russia and Iran, both of whom currently have a hand tied behind their backs due to Western sanctions. Iranian officials made some terse comments regarding the Saudis in recent parliament sessions. Amir Mousavi, a former IRGC diplomat and director of Iran’s Center for Strategic and International Studies, recently warned, “Saudi Arabia’s move is a suicidal step in the struggle against Iran in the region.”
Iran plans on cutting its oil exports to 1 MMBOPD, according to the country’s oil minister. The nation produced 2.77 MMBOPD in December 2014.
Russia, meanwhile, is undeterred by sanctions and produced a post-Soviet record of 10,667 MMBOPD in December. Russia’s oil minister expects output to be maintained and believes oil prices will eventually recover. The Saudis themselves had tough words for Russia, with Saudi oil minister Ali al-Naimi telling The Financial Times that Russia “doesn’t deserve a market share.”
Putin and Russia have stayed the course, finding alternatives to its sanctions by finding new trading partners. A landmark deal with China was finalized in November and involves moving 2.4 Tcf per year for the next 38 years at a price of $9.92 to $11.33 per Mcf. In his annual press conference, Putin assured his countrymen that “A positive turn and emergence from the current situation are inevitable,” even though the ruble has fallen 45% against the dollar since sanctions were first imposed. China has offered additional financial assistance for Russia if necessary.
During a speech given at Columbia University today, January 7, 2015, former Russian Deputy Minister of Energy and founder of the Institute of Energy Policy, Vladimir Milov, said that he thought Russia was on a dangerous path. “This year will be the first when we start to experience significant decline. The situation is still manageable, but the people in power [in Russia] make one systemic mistake after another.”
Naimi and the Saudis are offering no relief in the price slide, even if producers outside OPEC want to coordinate a production cut. “If they want to cut production they are welcome,” he said. “Certainly Saudi Arabia is not going to cut.”