Saudis ready to dump cheap oil by the boatload — and more!

Saudi Arabia’s state-run shipping company has hired multiple very large crude carriers to carry all the extra oil it plans on exporting next month—a rare move indeed for the shipping company that sports its own fleet of 41 tankers, according to Bloomberg sources.

Bahri, as the Saudi’s shipping company is known, has booked passage for its crude oil on three VLCCs, each with the capacity to haul 2 million barrels of crude. The preliminary bookings are heading to the US Gulf Coast, the sources say—but the bookings could still fail…

Next month, Saudi Arabia has plans to increase shipments of crude to its prized market, Asia, who will be more than happy to take on more oil at the substantial discount that the Saudis are selling their oil for as part of its oil war strategy. However, trips from to the US take 40 days, and Bahir’s own tankers would not return to Saudi Arabia in time to load these extra volumes.

But all that could change in the blink of an eye.

More tankers. More oil. Cheaper retail. What could possibly go wrong?

71 thoughts on “Saudis ready to dump cheap oil by the boatload — and more!

  1. Yee-haw says:

    Saudis sell oil at $25 in market share grab from Russia : The price war between the top two producers of crude is heating up as oil has worst week since 2008 financial crisis.
    Oil Price Crash: 50% Of U.S. Shale Could Go Bankrupt The U.S. oil industry is in a historic crisis that has the ingredients to be far worse than the 2008 financial meltdown. A decade ago, the shale industry barely existed, and falling oil prices cushioned the blow to the U.S. economy by making energy cheaper. Today, an oil market bust could pretty quickly plunge Texas, North Dakota and Appalachia, among other places, into a recession.
    Reportedly around 80% of shale DUCs (drilled but uncompleted wells) currently have break-even oil prices below $25 for West Texas Intermediate ($30 Brent).
    New Mexico’s most recent revenue estimates pegged oil prices for the budget year that ends in June to average $52 per barrel. Just a $1 change in the average annual New Mexico price of oil has an impact of roughly $22 million on the state general fund, according to the State’s Legislative Finance Committee.
    Trump Prepares Aid Package To Relieve U.S. Oil Producers (March 9th)
    Meanwhile in Iran:

  2. p/s says:

    “Saudi Booking Spree Sends Tanker Rates Soaring” Reportedly the majority of the 25-30 tankers hired by the Saudis are Very Large Crude Carriers, or VLCCs, each designed to transport 2 million barrel cargoes. Also “Traders are inquiring about crude tankers to store oil, following the return of a so-called super-contango structure. In such markets, companies can buy oil cheaply, store it on ships for a period of time, and then sell it at a higher price later, potentially making millions.
    Frontline [the world’s largest oil tanker company ] said earlier in the week that both oil traders and majors had been inquiring about such floating storage options. Vitol and Shell were among the companies looking to book ships with options for storage this week, according to fixture reports seen by Bloomberg. Product tanker company Torm A/S said it has recently received several floating storage requests across various fuel markets. The surge in freight rates has diminished the appeal of storing.”

  3. Foxy Loxy says:

    “Trump emerges as oil’s white knight after worst week since 2008” (FOX news)
    “The battered U.S. oil market may have just received a lifeline from President Trump after crude prices posted the worst week since 2008 hugging the $31 per barrel level, down 48 percent so far this year.
    “Based on the price of oil I have also instructed the Secretary of Energy to purchase, at a very good price, for large quantities of crude oil for storage in the U.S. Strategic Reserve, we are going to fill it right up to the top, saving the American taxpayer billions and billions of dollars and helping our oil industry,” Trump stated on Friday.
    The move, according to Phil Flynn of The PRICE Futures Group, should boost oil prices from historic lows.
    “This could send prices back into the $40s if the buyers are there,” said Flynn, who is also a FOX Business contributor, when reached for his reaction. “They [the U.S.] can buy oil at the lowest price in years,” he added.
    The Strategic Petroleum Reserve is the world’s largest supply of emergency crude oil, as described by the DOE, and was established as a backup facility to protect the U.S. in the event of market disruptions or potential shortages.”

  4. Update says:

    “Oil tankers drop anchor as traders see profit in price rout” In the height of the 2008-09 global recession, traders kept in excess of 100 million barrels at sea in a mix of contango trades and bets that prices would recover.
    Reportedly the state of New Mexico was counting on an oil price of $51 a barrel for the fiscal year that starts July 1. The current price is in the low 20’s. Each dollar drop represents a loss of about $22 million to the state’s $7.6 billion general fund budget.

  5. Pandora says:

    “US to send envoy to Saudi Arabia as Texas suggests oil output cut : Oil prices have lost more than half their value in the last two weeks as Saudi Arabia and Russia kicked off a price war.” “…The hope is that Trump could negotiate with Saudi Arabia and Russia and convince them to match cuts with a similar cut in production in Texas, said Ryan Sitton, a commissioner with the Texas Railroad Commission, the body that regulates the state’s oil and gas industry.”

  6. p/s says:

    “Oil Could Crash To $10 As World Runs Out Of Storage” (3/19/20)
    …“There are no buyers,” an oil trader from the U.S. told Reuters. “Refiners in trouble, exporters in trouble, producers in trouble. This is a disaster with no end in sight.”
    “Cargoes are being severely discounted to move as there are little prospects to export and also very few options to store on ship and/or tanks,” another industry source told Reuters.
    At the time of writing, Brent crude was trading at less than $28 a barrel, with West Texas Intermediate at $22.78 a barrel. (3/18/20)

    Live Crude Oil Price in Dollars

  7. Cassandra says:

    “Global oil storage is filling up rapidly as the coronavirus pandemic reduces consumption by tens of millions of barrels per day (bpd) while leading oil producers have yet to rein in their crude output.”
    “No comprehensive data exists on total storage volumes available in the petroleum supply chain or the amount unfilled at the start of the year, but the International Energy Agency (IEA) has said consumption could have shrunk by 20 million barrels per day because of the pandemic and national lockdowns.
    If that is roughly accurate, storage will be filling at the rate of 600 million barrels per month.
    And if Saudi Arabia and Russia increase their output as a result of the volume war by an extra 2-3 million bpd between them, the storage would fill even faster, at 650 million to 700 million barrels per month.
    The proportion of unused storage available to cope with the drop in consumption and unchanged production is unknown but filling quickly.
    Stocks are likely to be growing by 10% per month. On any plausible estimate for global storage, the entire supply chain is likely to be completely full within 2-4 months.”
    “Oil Tumbles Towards $20 As Glut Grows” (3/27/20)
    According to Bob Gallagher, a former executive director of the New Mexico Oil and Gas Association, Saudi Arabia can produce a barrel of oil for $9 per barrel.

  8. Russian roulette says:

    “There have been no contacts between Saudi Arabia and Russia energy ministers over any increase in the number of OPEC countries, nor any discussion of a joint agreement to balance oil markets,” an official from Saudi Arabia’s energy ministry said, referring to the wider grouping of oil producers.
    The comment came after a senior Russian official said on Friday that a larger number of oil producers could cooperate with OPEC and Russia, in an indirect reference to the United States, the world’s biggest producer, which has never cut production.
    “Joint actions by countries are needed to restore the [global] economy … They [joint actions] are also possible in the OPEC deal’s framework,” said Kirill Dmitriev, the head of Russia’s sovereign wealth fund.

    • Update says:

      LONDON, April 1 (Reuters) – Oil traders are storing as much as 80 million barrels of oil on tankers at sea, with further ships being sought as land storage sites fill up fast due to a global glut of stocks, shipping industry sources say.
      Daily tanker rates have rocketed to record highs of over $230,000 a day this week, and reached the $200,000 a day level around March 12. Traders have to pay a premium for longer term charters.
      “Owners have been able to put vessels away for 6-12 months at very attractive rates, supported by extreme floating storage economics,” broker Fearnley Securities said in a note this week. “We wouldn’t overrule seeing 100-200 VLCCs [very large crude carriers] taken off the market for the next 6-12 months.”

  9. 3Card Monte says:

    “U.S. equity markets rallied Thursday as global oil prices posted their biggest one-day gain in response to President Trump saying he expects and hopes Russia and Saudi Arabia will cut production.” (FOX Business)

    Donald J. Trump @realDonaldTrump 8:32 AM · Apr 2, 2020
    “Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!”

    OPEC debating oil output cut of 10 million barrels a day: Report
    Azerbaijan’s energy ministry says that a meeting of the OPEC group of oil producers is planned for April 6.

  10. Commentator says:

    Abu Dhabi joined Gulf states selling foreign bonds to bolster their finances in the face of falling oil and gas prices.
    The emirate launched a $7 billion three-part sale, selling $2 billion of five-year bonds, $2 billion of 10-year debt and $3 billion of 30-year notes, said a person familiar with the matter, who asked not to be named. The deal follows Qatar, which attracted about $45 billion of orders for a $10 billion Eurobond deal on Tuesday.
    The energy-reliant economies have offered premiums to their existing securities to attract investors after the coronavirus all but shut bond markets for developing-nation borrowers in March.
    Trump’s Coming Oil Shock: Shale Can’t Cut Enough To Save Itself
    Mexico Refuses to Cut Oil Output and Is Running Up Huge Losses
    Trump Forced by Oil War Into Unthinkable Push for Higher Prices : Donald Trump is trying to do something no U.S. president has dared to do in decades: Drive up the price of oil.

  11. So it goes says:

    ● “Saudi Arabia Sends Wave Of Supertankers To U.S. Ahead Of Oil Meeting”
    ● “The Saudi Wealth Fund Is Messing With the Market for Oil Stocks”
    ● U.S. Oil Companies Begin Slashing Production as OPEC Decision Nears : Market factors are forcing American oil producers to reduce their output, with more cuts to come if others join the effort.
    ● China has been stockpiling oil for years. Low prices give it reason to buy more
    ● The Trump administration plans to lease out space for energy companies to store oil in the nation’s Strategic Petroleum Reserve, according to two people briefed on the matter.
    A previous effort to buy millions of barrels for the emergency stockpile was canceled over a lack of funding.
    ● Texas lawmakers back $3B oil purchase to stabilize global markets, refill strategic U.S. reserve. A bipartisan group of lawmakers from Texas called Tuesday for a $3 billion federal purchase of oil to replenish the nation’s strategic reserve and prop up an energy sector rattled by a price war and global drop in demand during the coronavirus outbreak.

  12. 3Card Monte says:

    “OPEC+ reaches deal to cut oil production by 9.7 million barrels per day”
    “Members of OPEC and their allies, including Russia and Mexico, announced Sunday that they have agreed to cut production by 9.7 million barrels a day in May and June, the deepest cut ever agreed to by the world’s oil producers. After that, the group will steadily ramp up production until the agreement expires in April 2022.”
    “While historic, the deal is unlikely to solve the demand crisis. The agreed reduction in output amounts to only about 10% of the world’s normal supply of oil, far below the estimates for how much demand for oil has collapsed amid the coronavirus pandemic.
    On Friday, though, Mexican President Andrés Manuel López Obrador said his country would cut its output by 100,000 barrels per day. While that amount was far less than what was proposed at Thursday’s meeting, López Obrador added that US President Donald Trump offered to cut US production by 250,000 barrels per day to compensate for Mexico. The United States is not an OPEC+ member.
    At a news conference Friday, Trump confirmed he spoke to the Mexican President and agreed to a cut, though he did not confirm the exact size. He said Mexico would reimburse the US at a later date.
    …Analysts at Goldman Sachs called the deal “historic yet insufficient,” adding that the voluntary cuts were “still too little and too late to avoid breaching storage capacity.”
    “Ultimately, this simply reflects that no voluntary cuts could be large enough” to offset the loss in demand, which they pegged at 19 million barrels per day on average in April and May.”

  13. Cassandra says:

    Oil prices tank another 21% as storage fears persist, commodity giant BP warns of a shock ‘on a scale never seen before’ Oil prices had recovered from historical lows in recent days, but on Monday oil prices plummeted 30% after United States Oil Fund, one of the biggest exchange traded funds in oil announced it would sell all futures contracts for delivery in June over a four day period.

    “Trump Could Use ‘Nuclear Option’ To Make Saudi Arabia Pay For Oil War” “…it may be that Trump will use the threat of such tariffs on Saudi Arabia, as his mercurial reputation may work to convince the Saudis that he is unpredictable enough to impose such taxes, regardless of the short-term economic consequences. Even as it stands, he needs to do something as around 44 million barrels of Saudi crude are expected to reach the U.S. over the next four weeks, according to oil industry and shipping data. This is around four times the most recent four-week average, according to EIA records, and it is mostly due to be delivered to the already overwhelmed Cushing delivery point. Republican Senator Kevin Cramer of North Dakota, who has advised Trump on energy issues, has been calling on the White House to take action to stop the very large crude carriers from unloading, and several senators and congressmen have threatened to vote to withhold military aid to Saudi Arabia. Trump, for his part, has so far only said that he will “look at it,” referring to stopping these new imports.”

  14. 3Card Monte says:

    U.S. buyers of Saudi Arabian crude oil cancelled at least seven April-loading tankers after a jump in freight costs, two industry sources said, likely to result in lower-than-expected shipments from the world’s top exporter.
    The move shows how some buyers are not rushing to take extra oil despite a slide in prices this month to below $16 a barrel, the lowest this century, as demand has collapsed following government measures to contain the spread of the coronavirus.
    Even after the cancellations, the volume of April-loading Saudi crude heading to the United States is still set to increase, the source said. Saudi exports to all destinations are expected to rise this month.
    The changes in supply terms were seen as likely to lead to cancellations of April cargoes by buyers across the world as they were not expecting to bear transport costs in full.
    Iraq, OPEC’s second biggest producer, also informed customers it was unable to compensate for the jump in freight costs.

  15. Yellow Jack says:

    A fleet of supertankers carrying Saudi oil will add to the growing congestion at U.S. ports in coming weeks at the same time producers are shutting in output as they run out of space to store unwanted supplies.
    A total of 43 million barrels of Saudi oil is set to arrive on the U.S. Gulf and West coasts by May 24, according to Rystad Energy. The flotilla — comprising 28 tankers, including 14 very large crude carriers, or VLCCs — will join a queue of 76 tankers waiting to unload in U.S. ports as the greatest oil glut in history plays out.
    Dozens of tankers are lined up off the two coasts with demand for motor and jet fuel destroyed by the Covid-19 pandemic. There are 34 tankers already waiting in line to offload about 25 million barrels on the West Coast, and 31 tankers lined up off the U.S. Gulf Coast.

  16. Ok then... says:

    “U.S. Pulling Patriot Missile Batteries Out of Saudi Arabia Amid Oil Dispute : Move scales back American presence in Saudi Arabia just months after the Pentagon began a military buildup there to counter threats from Iran”
    Two squadrons of US fighter jets have already left the region, and US officials are said to be considering a reduction in the US Navy presence in the Gulf. The reductions are said to be based on assessments by some officials that Tehran no longer poses an immediate threat to US strategic interests.

  17. Update says:

    “The bill comes due for Saudi Arabia’s oil price war : First came coronavirus, then the price war; now painful government austerity measures that could prove unpopular.”
    “Saudi Arabia’s latest oil production cuts show it is back in ‘whatever it takes’ mode, strategist says”

  18. So it goes says:

    With Storage Space Evaporating, the Oil and Gas Industry Will Get to Put Its Products Back Underground : The Railroad Commission has rolled back rules that once prohibited producers from storing liquid hydrocarbons in geological formations across the state, despite risks to aquifers. …Commissioners also voted against capping oil production, which may have slowed the stream of Texas oil enough to let storage capacity stabilize. Experts say doing so would have made the potentially dangerous underground storage unnecessary. (Texas Observer 5/21/20)

    The oil industry only has two choices as it reshapes itself after the oil price crash — either become broader energy firms or pursue a narrower specialization in oil and gas, Energy Voice reported, citing a new report from PwC.

  19. Puppeteer says:

    “Oil prices are collapsing after Saudi Arabia sends ominous signal”
    “Saudi Arabia Just Crushed US Crude Oil Prices Again”
    “Oil Extends Drop After Saudi Price Cuts Show Demand Concern”

  20. Palsy-walsy says:

    “Once an American foe, now a friend: OPEC turns 60”
    “Trump orders from Saudi Arabia what he needs for the oil price – and he is served,” Chakib Khelil, who was Algeria’s oil minister for a decade and OPEC’s president in 2001 and 2008, told Reuters. “So indeed OPEC has changed.”
    The Saudi Energy Ministry declined to comment.
    See also

  21. Update says:

    “Oil Prices Slide As OPEC Opens The Valves” (Oct 1, 2020)
    “OPEC holds special workshop on forecasting global oil demand and non-OPEC supply”
    “We remain cautiously optimistic about the oil market’s recuperation, even as the world continues to battle COVID-19 resurgences and clusters,” the OPEC Secretary General said, adding, “large uncertainties and risks will continue to destabilize the oil market and affect the pace of economic recovery” until an effective vaccine is found.
    (Oct 2, 2020) “Oil dropped while gold fluctuated after President Donald Trump said that he tested positive for Covid-19 with just one month left until the U.S. presidential election.”

  22. Boiling frog says:

    “US boosts crude sales to China, forcing Saudis to find other markets”
    “Saudi Arabia Pegs Budget to Oil Staying Around $50 Until 2023”
    “As much as 70 percent of the more than 100,000 jobs lost in the U.S. oil, gas, and chemicals industries due to the pandemic may not return by the end of 2021, Deloitte said in an analysis on Monday.”
    “A U.S. government watchdog agency faulted the Trump administration Tuesday for its handling of a COVID-19 relief effort that awarded energy companies breaks on payments for oil and gas extracted from public lands in more than 500 cases.
    The Government Accountability Office, a nonpartisan arm of Congress, said haphazard rules for the program left the administration unable to say how much relief was given or if it would ultimately benefit taxpayers, as was intended.”
    “Trump report touts oil and gas as ‘energy security’ amid US climate disasters : The document, which cost about $200,000, fails to mention either the realities of climate crisis or the downsides of the energy industry.
    The report comes a month before the US government will exit an international agreement on climate change. Trump continues to refuse to acknowledge that human activity is the main driver of rising temperatures.”

  23. Update says:

    The oil industry is in crisis. ConocoPhillips is doubling down
    Meanwhile, an idled Floating Storage and Offshore (FSO) vessel containing 1.3 million barrels of crude oil with a severe list off the coast of Venezuela is raising fears an environmental disaster.
    A spill from the FSO Nabarima, which is anchored in the Gulf of Paria, would dump five times the amount of oil that was spilled by the Exxon Valdez in 1989 off the Alaskan coast
    The incident comes as another stranded FSO has been deteriorating in the Red Sea off Yemen since 2015, threatening to spill 1.1 million barrels of crude oil. A report last week said a United Nations team was awaiting agreement with Yemen’s Houthis to access the vessel, but it was likely to be several weeks before any plan is finalized.

    • Ahoy says:

      The Venezuelan state oil company PDVSA is moving to transfer crude off of the Nabarima floating storage and offloading (FSO) facility, operated by the Petrosucre joint venture between Venezuelan state oil company Petroleos de Venezuela and Italy’s Eni.
      The US Treasury Department has levied financial sanctions and an oil embargo against PDVSA, before imposing secondary sanctions and targeting shipping companies. Washington has also sought to generate fuel shortages in the Caribbean country by threatening companies that exported fuel or did swap deals with PDVSA.
      Reportedly the unmanned vessel has seawater in its engine room that’s up to 1.5 meters deep.
      PDVSA now plans to offload some of the crude on board via a ship-to-ship (STS) transfer involving the Icaro, an Aframax vessel it owns, a person familiar with the matter told Reuters on Monday. The Refinitiv Eikon data showed the Icaro approached the Nabarima at 2:37 p.m. local time (1837 GMT).
      The Venezuela-flagged barge Inmaculada was also expected to participate in the STS operation, which carries its own set of risks, according to a person familiar with the matter and a document seen by Reuters.

      • DDI says:

        Trinidad and Tobago officials say the Nabarima is intact and poses ‘minimum risk’ of oil spills in the Caribbean “Minister of Energy and Energy Industries Franklin Khan said a team of experts from his country inspected the Nabarima – a floating storage and offloading facility (FSO) – on Tuesday, allaying previous fears that it was on the brink of sinking and spewing 1.3 million barrels of oil.
        The double-hulled tanker is “intact and poses a minimum risk of any oil spills at this time”, Khan said.
        He said Venezuela had started the slow process of unloading oil to further avoid disaster, an operation expected to take up to 35 days.
        “The team confirm that major maintenance is ongoing,” Khan said. “Pumps and electrical motors are being repaired and replaced as needed.”
        Trinidad officials said they will continue to monitor the effort, and have applied for permission from Venezuela for a follow-up inspection in a month.

  24. Nodding Donkey says:

    (10/20/20): “Surprise Crude Build Sends WTI Prices Down”
    Re: West Texas Intermediate
    (10/21/20): “Oil stockpiles declined roughly in line with expectations last week, according to the Energy Information Administration. Crude oil inventories fell 1 million barrels, against expectations for a draw of 1.02 million barrels. That comes a week after crude stocks fell 3.8 million barrels.
    Inventory has fallen in all but one of the last six weeks as the economy tries to come back to life after Covid-related shut downs earlier this year. Crude Oil WTI Futures, the U.S. benchmark, fell 2% in morning trading ahead of the data release.
    Crude oil stored at Cushing, Oklahoma, increased 975,000 barrels compared to an expected build of 1.1 million barrels.
    Cushing is a major trading hub for crude oil and a price settlement point for West Texas Intermediate on the New York Mercantile Exchange.,_Oklahoma#Oil_industry

  25. Update says:

    “After much debate, the OPEC+ group has finally reached an agreement on oil production for next year. Or at least for January.
    OPEC+ will, as a group, add in 500,000 barrels per day in January to its oil production quotas, which currently calls for a production cut of 7.7 million bpd. The total production cut in January will now just 7.2 million bpd.
    Future assigned quotas could rise or fall, and to determine those levels of oil production beyond January, OPEC+ ministers will hold additional meetings—one each month.”
    See also

  26. Update says:

    12/23/20: “A shift in consumer behavior, particularly in western countries, has driven oil prices above $50 a barrel in the past few weeks. People have been diverting expenditure previously earmarked for now-unattainable things — like holidays and meals in restaurants — toward purchasing physical goods. And that’s only the start of it: stores, warehouses and industries have undertaken a huge inventory restocking phase. As more boxloads of stuff get moved across the planet, so demand for fuel to power ships, trucks and freight trains has soared.”

  27. Update says:

    “Saudi oil giant Aramco’s profits plunge nearly 45% amid pandemic : COVID-19 took a heavy toll on Aramco but the company still made a profit of $49bn and will pay shareholders dividends worth $75bn.”
    Crude prices have risen in recent weeks to more than $60 per barrel.

  28. Update says:

    “In a rare public spat between the Gulf state allies, the United Arab Emirates and Saudi Arabia have found themselves at loggerheads over an OPEC plan that seeks to extend a cap on oil production.
    Saudi Arabia has led a push in OPEC to raise output by some 2 million barrels per day from August to December 2021 but extend remaining cuts to the end of 2022.
    But the UAE pushed back on Sunday, saying a cut in output beyond the initial deadline of April 2022 would be “unfair to the UAE”.
    The UAE has said the market is “in dire need of higher production” of crude oil following a plunge in oil prices and production last year as the pandemic hit travel and energy use.
    OPEC’s sharp output cuts have kept prices from collapsing even further. However, pumping too much too soon could undermine the rebound in energy prices.
    Meetings on Friday, both between the 13 members of OPEC proper and between the 23 members of OPEC Plus, failed to reach a deal on oil output.”
    “OPEC+ meeting canceled, sending oil prices climbing higher”

  29. His Highness says:

    OPEC and allies target full end to oil production cuts by September 2022, agree to baseline changes
    “The unusually public spat appeared to underscore an emerging rivalry between the longtime Gulf allies as both seek to diversify their economies amid a longer-term shift away from the petroleum industry. Both countries have indicated desires of becoming the de facto business hub in the region.
    The UAE had hoped that by increasing its output in the short term – as the global economy recovers from the coronavirus pandemic – it could increase revenue needed to support its economic diversification plans.
    Saudi Arabia has cautioned that too large an increase could put downward pressure on prices, stifling investment and leading to supply issues later on.”

  30. Update says:

    Infographic: How the price of petrol has changed (2001-2021)
    The global average price of petrol has doubled over the past 20 years. Here are five graphics that explain the global oil and energy industry.
    Goldman Sachs ramped up its already optimistic forecast on Sunday, calling for Brent crude to hit $90 a barrel by the end of the year. That’s up from its previous call for $80.
    The Wall Street bank expects US crude to hit $87 a barrel, up from $77 previously.
    “While we have long held a bullish oil view,” Goldman Sachs strategists wrote in a note to clients, “the current global oil supply-demand deficit is larger than we expected.”

    • Update says:

      Oil Price Fundamental Daily Forecast – Unexpected Demand from Fuel Switching Put $100 Crude on Radar
      The event that could eventually send prices to $100 per barrel is that some industries have begun switching fuel from high priced gas to oil.
      U.S. West Texas Intermediate and international-benchmark Brent crude rallied to multi-year highs on Friday on a rebound in demand amid tighter supply inventories.
      The U.S. benchmark crossed the psychological $80 per barrel level on Friday for the first time since November 2014, jumping more than 2% before easing into the close.
      Oil prices received a boost at the start of the week after OPEC+ opted to stick to a prior agreement to raise production by a modest 400,000 bpd in November despite the recent fuel shortage.

      • Will C. says:

        “The global benchmark Brent closed above $85 a barrel for the first time since October 2018 amid a stronger equity market and ongoing concerns around a worldwide energy crisis.”
        “Crude has advanced for the past eight weeks as the energy crisis — prompted by shortages of natural gas and coal — coincided with a rebound in demand from key economies emerging from the pandemic. Russia indicated its keeping a tight grip on gas supplies to Europe and OPEC+ hasn’t pumped enough crude to meet its production targets, exacerbating a tight supply situation. It’s “possible” that oil will hit $100 a barrel this winter, according to commodities trader Mercuria Energy Group Ltd.”

  31. Cassandra says:

    The United Nations Environment Program’s annual production gap report found governments were on track to produce more than twice the levels of fossil fuels in 2030 than would be needed to keep rising global temperatures to below 1.5 degrees Celsius.
    The findings reaffirm the yawning gap between meaningful climate action and the rhetoric of policymakers and business leaders publicly touting their commitment to the so-called “energy transition.”
    Mark Carney, former governor of the Bank of England and the U.N.’s special envoy on climate action and finance says ‘enormous’ stranded assets show the need for a rapid energy transition
    The term “stranded assets” refers to assets tied to fossil fuels that are no longer able to generate an economic return because of changes associated with decarbonizing the economy.
    Carney, as governor of the Bank of England, first warned about the “potentially huge” risk to investors from stranded assets in 2015, saying vast reserves of coal, oil and gas could become “literally unburnable.”

  32. Update says:

    The world’s largest oil company, Saudi Aramco, reported $30.4 billion in third-quarter net income on Sunday, bolstered by a surge in oil prices and recovery in demand as the coronavirus pandemic eases.
    WTI crude oil has soared above $85 in recent weeks, a level not seen since 2014, as the market shifts focus from demand recovery to supply scarcity. Natural gas prices are up around 130% this year, meaning the full extent of the global energy crisis is more likely to be felt in the fourth quarter results.
    WTI stands for West Texas Intermediate (occasionally called Texas Light Sweet), an oil benchmark that is central to commodities trading. It is one of the three major oil benchmarks used in trading, the others being Brent crude and Dubai/Oman. WTI has a low density and low sulfur content, making it easy and less expensive to refine.

  33. Will C. says:

    (White House): “President Biden Announces Release from the Strategic Petroleum Reserve As Part of Ongoing Efforts to Lower Prices and Address Lack of Supply Around the World”
    “Today, the President is announcing that the Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply.
    The President has been working with countries across the world to address the lack of supply as the world exits the pandemic. And, as a result of President Biden’s leadership and our diplomatic efforts, this release will be taken in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom. This culminates weeks of consultations with countries around the world, and we are already seeing the effect of this work on oil prices. Over the last several weeks as reports of this work became public, oil prices are down nearly 10 percent.”

  34. Déjà vu says:

    “Oil plunges as new coronavirus variant fuels worries : The emergence of the new strain represents the biggest threat to the recovery in oil consumption.”
    Futures in New York tumbled below $74 a barrel and benchmark Brent shed as much as 6%, the most since July. The emergence of the new strain represents the biggest threat to the recovery in oil consumption for several months, with a World Health Organization panel set to discuss the variant later. Global markets sold off heavily, as traders fled to haven assets.
    The price plunge is the latest dramatic twist ahead of a key OPEC+ meeting next week.

    • Update says:

      OPEC+ is sticking with its plan to keep slowing raising oil output, despite the threat the new Omicron variant of the coronavirus could pose to global crude demand.
      OPEC+ – a grouping of the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, and its allies led by Russia – made the decision at the conclusion of its meeting on Thursday to stick with its current plan to adjust crude output by an additional 400,000 barrels a day in January.
      Benchmark oil prices have fallen more than $12 since the World Health Organization declared Omicron a “variant of concern” last week, triggering fresh travel restrictions – which could dent crude demand – as well as fueling concerns over how effective current COVID-19 vaccines may be against the new strain.

  35. Update says:

    “Oil slid for a sixth straight week, marking the longest stretch of weekly declines since 2018, as the omicron variant jolts markets and OPEC+ continues to hike supply.”
    Meanwhile: “President Joe Biden has pledged to make it “very, very difficult” for Russia’s Vladimir Putin to take military action in Ukraine as U.S. intelligence officials determined that Russian planning is underway for a possible military offensive that could begin as soon as early 2022.”

      • Footnote says:

        “By 1895, the state of California, alone, produced 1.2 million barrels of oil. With the new oil supplies from California—along with increased oil production in Texas and Pennsylvania—the price decreased from $9.60 per barrel in 1860 to $0.25 per barrel in 1895.
        …The additional California oil fields—along with booming oil supplies in Texas from Spindletop—resulted in another surplus of oil reaching the market, again impacting the price of the commodity.
        With the accelerated oil drilling, the price of oil in the 1920s fell from $28 per barrel to below $10 per barrel. The issue became an increasingly debated topic in the American economy and political arena.
        In 1924, President Calvin Coolidge created the Federal Oil Conservation Board in an effort to control oil production and stabilize the oil market.
        However, the American Petroleum Institute (API), representing over 500 oil companies, opposed the program because it feared many of its affiliated oil corporations would go out of business. Ultimately, through API’s resistance, Coolidge’s program never gained sufficient power.”
        [Stunning photos from the time when oil derricks loomed all over California beaches, 1910-1955]

  36. Update says:

    OPEC+ announced on Tuesday that it is sticking with its plan to gradually boost oil output next month, as the group brushed off concerns about Omicron’s impact on global crude demand.
    The 23-nation member group encompassing Saudi Arabia-led OPEC and the cartel’s allies led by Russia agreed at the end of its meeting on Tuesday to adhere to its previous decision to increase oil production by 400,000 barrels a day in February.

  37. Upchuck says:

    “Oil prices jumped on Wednesday, heading near a previous seven-year high, after OPEC+ decided to stick to its planned output increase despite pressure from top consumers to raise production more quickly.
    A source told Reuters that OPEC+ agreed to increase oil production by 400,000 bpd from March after a short meeting.
    Brent crude was up $1.16 cents, or 1.3%, at $90.32 a barrel by 1303 GMT.
    U.S. West Texas Intermediate crude rose $1.28 to $89.48 a barrel.”

  38. Update says:

    Saudi oil giant Aramco reported a stunning 90% surge in second quarter net income and record half year results on Sunday, as high oil prices continue to drive historic windfalls for “Big Oil.”
    Aramco said strong market conditions helped to push its second quarter net income to $48.4 billion, up from $25.5 billion a year earlier. The result easily beat analysts estimates of $46.2 billion.
    Aramco said half year net income soared to $87.9 billion, easily outpacing the largest listed oil majors, including Exxonmobil, Chevron and BP and other “Big Oil” companies, which are all benefiting from a commodity price boom.
    The blowout results are also a major windfall for the Saudi Arabian government, which relies heavily on its Aramco dividend to fund government expenditure. The Kingdom reported a $21 billion budget surplus in the second quarter.

    • Bubblin crude says:

      Saudi fund invested $500 million in Russian oil as Ukraine invasion began
      Saudi Arabia and other Gulf states have so far tried to maintain what they say is a neutral position on the war in Ukraine, frustrating some Western officials who have sought to isolate Russia over the invasion.
      Kingdom Holding, which is 16.9% owned by Saudi Arabia’s sovereign wealth fund chaired by crown prince Mohammed Bin Salman, had not previously revealed the details of its investments.
      Saudi Arabia and Russia lead the OPEC+ group, an alliance formed in 2017 between the Organization of the Petroleum Exporting Countries (OPEC) and allied producers.

  39. Déjà vu says:

    The White House angrily pushed back at OPEC+ after the oil producer group announced its largest supply cut since 2020, lashing out at what President Joe Biden’s administration described as a “shortsighted” decision.
    OPEC and non-OPEC allies, a group often referred to as OPEC+ [the largest member of which is Russia], agreed on Wednesday to reduce oil production by 2 million barrels per day from November. The move is designed to spur a recovery in crude prices, which had fallen to roughly $80 a barrel from more than $120 in early June.
    Energy analysts believe the deep production cuts could yet backfire for OPEC kingpin and U.S. ally Saudi Arabia, particularly as Biden hinted Congress would soon seek to rein in the Middle East-dominated group’s influence over energy prices.
    There are also congressional calls to pull all U.S. forces and military equipment out of Saudi Arabia and the United Arab Emirates.
    Meanwhile Biden has directed the Department of Energy to release another 10 million barrels from the Strategic Petroleum Reserve next month.

    Following its historic shift to being a net exporter of petroleum in 2020, the United States continued to export more petroleum (which includes crude oil, refined petroleum products, and other liquids) than it imported in 2021. According to the EIA’s February 2022 Short-Term Energy Outlook (STEO), net crude oil imports were already expected to increase, making the United States a net importer of petroleum in 2022.

  40. Supply & Demand says:

    The global oil market remains tight according to Saudi Aramco, the largest oil producer in the world. And that does not bode well for a world that still relies heavily on fossil fuels.
    “Today there is spare capacity that is extremely low,” Saudi Aramco CEO Amin Nasser says at a conference in London. “If China opens up, [the] economy starts improving or the aviation industry starts asking for more jet fuel, you will erode this spare capacity.”
    Nasser warns that oil prices could quickly spike — again.
    “When you erode that spare capacity the world should be worried. There will be no space for any hiccup — any interruption, any unforeseen events anywhere around the world.”
    Extortion is defined as the practice of obtaining something, especially money, through force or threats.

    p/s: The largest North America oil refinery is in Port Arthur, Texas, and the Saudi Arabia government owns 100 percent of it.

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