Note: It is indeed possible for the EU – including Germany too – to immediately cut Russian oil imports to zero and not suffer prolonged high oil prices. How? I will explain in a coming post. This is a topic I have been working on intensively the past couple weeks.
I mention some of my (and others’) rationale for saying this in my answer to the second question from Al Jazeera. NOTE: A very good reference on this is: Christof Rühl speaking last week to bne inelligence. I strongly concur with him. (this note added 15 Mar.)
Here’s an English transcript of my Al Jazeera comments on OPEC+ negotiations and some further remarks on the group’s agreement to raise production. Good evening from Berlin. Answer 1. Well, OPEC-Plus is faced with maintaining a very delicate balance. On the one hand, demand in the Western world is down, its weak, while in the Eastern world, in Asia – in China and India – demand is relatively strong. And this is a complicating matter. At the same time, in supply, in Libya, for example, the oil production is not under the [OPEC+] agreement and has been coming back on the market. OPEC has been doing relatively well, in the last few months or so, of balancing the market. The question is, how to maintain this going forward, with its exports, how to balance supply with demand. But what is appearing is not the big split between Russia and Saudi Arabia that we saw last year in the Oil Price War. Now we have differences … such as we see with the UAE [i.e., versus the Saudis]. The UAE would like, as we have seen, also Russia has said, an increase in production. That would be very difficult for other, more expensive producers to do at this point. Answer 2: Yes. It does. I mean, of course the UAE has been getting a lot of press [about its demand to increase production], … so it is a matter of how serious the UAE is, and how serious the Russians are to want to raise production in some way.
The oil market remains glutted, with price in the mid-$40’s. Despite furtive hopes over recent weeks by the business press about “imminent re-balancing” of global supply v. demand and about “draw downs” of record-high global storage inventories, data reveal only incremental re-balancing has occurred since fall of 2014 when this all began. (And, from November 2014, the Saudi’s responded by fighting for their market-share rather than for boosting price, which would have been impossible for OPEC to do on its own given the huge supply glut.)
I was interviewed today by CNNMoney’s Matt Egan on what OPEC should expect from US shale as they hold their 169th “Ordinary Meeting” in Vienna tomorrow (2 June). Indeed, at some point oil production and demand will balance (likely in 2017), and then the Saudis and OPEC will have to cautiously test the presently unknown dynamics of high-tech US shale on the rebound. -Egan cites my point of view in his article. Read on … – Tom O’D.
Don’t bet against the resilience of U.S. oil companies
by Matt Egan @mattmegan5 CNNMoney (New York) June 1, 2016: 12:23 PM ET
Many expected U.S. oil output would collapse under the weight of a lengthy price war with the mighty OPEC, the fractured oil cartel that’s meeting in Vienna Thursday.
The U.S. pumped 9.13 million barrels per day in March, down by a miniscule 6,000 barrels from the prior month, according to stats released this week by the U.S. Energy Information Administration. That represents a deceleration from recent monthly declines. By comparison, daily U.S. output dropped by 58,000 barrels in February and by 83,000 barrels in December.
EU and Iranian foreign ministers in Vienna (Austrian Foreign Ministry)
My latest at the IP Journal of the German Council on Foreign Relations (DGAP): US-EU Cooperate on Iranian Nonproliferation: Agreement positions Tehran as regional leader — IP Journal 14/08/2014
Although negotiators failed to reach agreement on Iran’s nuclear program by the late-July deadline set last November, as Iran’s Foreign Minister Mohammad Javad Zarif put it: “We have made enough headway to be able to tell our political bosses that this is a process worth continuing. … I am sure Secretary Kerry will make the same recommendation.” Indeed, Washington, Brussels, and Tehran readily agreed on a four-month extension.
This represents a sea change in tone from the period prior to November 2013, Continue reading →
[Note: This post on the Iran crisis is in Spanish, consisting of my written answers to the host of “Agenda” on the Deutsche Welle network–the German international TV service.]
Hoy mi blog es en Español. Trata de la crisis nuclear entre Iran y los EEUU. Aquí abajo están mis respuestas que escribí a las preguntas del entrevistador de el programa ‘Agenda’ en Deutsche Welle, la red internacional de televisión de Alemania (con algo explicaciones adicionales).
Pregunta: Irán quiere poner en marcha las negociaciones con grandes potencias por el tema nuclear, porque creé usted que lo hace ahora? En qué términos?
Repuesta: Pues, permítame explicarle las razones por las cuales ambos lados ahora quieren reiniciar negociaciones: