OPEC stated they will increase supply.
My mind went over things…
Iran to be attacked?
Price way down this morning.
Down about $5 yesterday, and another $5 today.
So many ways that oil can be taken off the market, with the stroke of a pen.
Steve
History is that OPEC sees oil prices almost the same as interest rates. Back when we had the big Asian meltdown–I think 1993, OPEC maintained oil production and allowed oil prices to fall all the way to $12/bbl. They explained this was in an effort to stimulate the recovery of the global economy.
They may now have similar ideas in mind in response to tariff increases.
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Managing OPEC is like herding cats. But overall they understand where their bread is buttered.
Despite what you may have read on Fox News, the US is a petroleum exporter and has been for a few years. We got plenty, thanks to fracking. Putin has ordered a Drill Baby Drill policy for the US. That’s great, but fracking is expensive compared to Middle East oil. With OPEC increasing production and tariffs decreasing domestic economic output this should force US producers to the sidelines or out of business all together.
To put it another way, Putin and OPEC are playing chess. Trump is also playing chess, but he is trying to eat the pieces, while is drooling sycophants explain that eating the pieces is the proper way to play chess.
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I think we understand that oil is a commodity. Its not all the same and not interchangeable. And shipping costs are a factor. Also only some refineries are equipped to process some crudes.
Prices usually move in tandem with negotiated differentials from a few standards. Yes, US producers can make their own deals, but if they vary much from the standards arbitragers have a field day.
or price. Shale oil is more expensive to extract especially with higher loan interest rates.
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On the old boards we had people who discussed oil. Is Telegraph still around? He spoke of Hubbards Rule-- the idea that global oil production was abt to peak and oil prices would skyrocket. Then came fracking.
He liked to promote Valero. They are a refiner with no oilwells. All purchased on contract. Their refineries are equipped to process high sulfur crude. Most refineries are not. So they buy their oil at a discount from market.
Probably an example of how it is done throughout the industry.
Those were the days. Telegraph and albaby1 went at it over the peak oil thing for years. The counter to the peak oil argument is that new technology essentially creates more available oil. Sure enough, fracking came along and that’s what happened.
Telegraph either didn’t make the transition to the new boards or didn’t stick around long. But in some of his last posts he was still going on about peak oil. I can’t think of another example of someone so completely unable to admit they were wrong.
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Ah, the old Peak Oil Party board. Telegraph never accepted that geology wasn’t going to push us to an imminent sharp reduction in oil production. It’s a factor, but technology and price and investment mattered too. The below is a nice summary of what went wrong with Peak Oil theory, from someone that was originally part of the movement:
At the time I started posting on Peak Oil Party (somewhere around 2005 or so, IIRC), the Colin Campbell/Jean Laherrère crowd were predicting that the Peak would happen in a few years (or had already happened, if you were Ken Deffeyes). The IEA (or EIA, I can’t remember) said, “Nah, we’re good” and said that we wouldn’t see a peak anywhere in their forecast horizon, which went out to 2030. Two decades later, IEA/EIA were clearly right. Amusingly, it seems like some of the doomers are still out there - Berman discusses a 2025 Jean Laherrère chart in his blog entry. Most of the Peak Oilers moved on, but apparently not all of them…
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Oil is still an important commodity. Oil prices do impact the economy. Its one to keep an eye on.
I have a chunk of Exxon from the days of negative oil prices. Pays 9% dividend. Share price has tripled.
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“A prolonged trade dispute between the U.S. and China is likely to reduce global trade volumes and…”
It’s drill, baby drill time! Just kidding.
I miss the good ol’ days when our president wasn’t an incompetent moron.
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It is interesting that presidents lead through stability. That is out the window right now.