Oil ministers of Venezuela, Saudi Arabia & Qatar had agreed in February to freeze output if others did too. AFP/Getty Images
After a Wikistrat Webinar I did, MarketWatch asked me about Saudi & OPEC policy, ond US Shale. Read on here, or at MarketWactch! – Tom O’D.
5 key issues OPEC must wrestle with at its June meeting
Oil output freeze is needed to ‘create a firm price floor’: analyst
The oil market has given members of the Organization of the Petroleum Exporting Countries a reason to crack a cautious smile when they meet June 2 in Vienna.
Signs of a more stable oil market have emerged since the cartel members last held a regularly-scheduled meeting. Oil prices CLN6, +0.04% LCON6, -0.38% have gained more than 30% so far this year. And both West Texas Intermediate, the U.S. benchmark, and Brent crude, the global benchmark, briefly traded above $50 on Thursday.
Global production is falling following a larger-than-expected weekly decline in crude supplies, according to a report from the American Petroleum Institute late Tuesday. The report comes as the number of active-drilling rigs have been in a steady state of decline and oil-company spending cuts, oil-and-gas sector bankruptcies, and recent outages in Africa and North America, have been supportive for crude prices.
“OPEC members are likely to be a little happier going into June’s meeting than they were in December,” Tom Pugh, commodities economist at Capital Economics, said in recent research note.
Oil prices have “surged by about a third since the start of the year,” he said. The “higher prices will have removed some of the pressure on [OPEC] to act to prop up prices.”
But that doesn’t mean major oil producers can sit back and relax when they get together. Oil market supply and demand haven’t fully stabilized and there a lot of factors than can, and probably will, rock OPEC’s boat.
Here’s a rundown of what analysts see as the key issues at hand and possible outcomes for the OPEC summit: Continue reading
Posted in AICGS, Energy and Geopolitics, Energy and Geostrategy, Global Oil Market, Global Oil system, international relations, Oil prices, Oil supply, OPEC, PDVSA, Saudi Arabia, shale oil, The USA, Tight oil, U.S. oil, Uncategorized, Venezuela oil
Tagged Energy, geopolitics, OPEC, PDVSA, Saudi Arabia, United States
Here’s my live interview recently on Sky News – the all-news UK channel. It just went up.
Here’s the gist: Years-long high prices brought the US shale revolution and other new higher-cost oil online like offshore of Brazil and Africa. This glut was already dropping prices when the Saudi’s decided in November 2014 that OPEC alone could not cut enough production to reverse the slide. So what to do if Russia and Mexico won’t join an OPEC cut? Continue reading
Posted in Energy and Geopolitics, Global Oil Market, Global Oil system, Mexico, Oil prices, Oil supply, OPEC, PDVSA, Russia, Saudi Arabia, The USA, Tight oil, Trade and Commerce, Uncategorized
Tagged oil prices, oil sector, OPEC, PDVSA, Saudi Arabia, United States
PDVSA president, Eulogio Del Pino, meets to “consolidate the new PDVSA.” (@delpinoeulogio Aug 11)
Mery Mogollon quotes me several times on PDVSA’s trajectory in Platt’s September Energy Economist. Here it is:
Venezuela, South America’s biggest oil producer, has seen the value of its oil exports fall to its lowest level since 2004. The economy faces hyperinflation and increasing shortages of basic goods. Debt default seems highly likely. State oil company PDVSA has neither the institutional capacity nor the funds to expand oil production. It is a downward spiral that will lead to political change. Continue reading
Posted in Faja of the Orinoco, Global Oil Market, heavy oil, Oil prices, OPEC, PDVSA, PDVSA weakness, Venezuela oil
Tagged Eulogio Del Pino, Heavy crude oil, Nicolás Maduro, oil sector, OPEC, PDVSA, Petróleos de Venezuela, Venezuela
Merkel and Obama at G7. Main topic was Russian threats to EU and Ukraine
An AICGS workshop with Dr. Thomas O’Donnell was held on May 27 in Washington, DC with a lively full-room attendance.
O’Donnell presented preliminary results of interviews he conducted in Washington during April and May to hear candid views of US energy-and-geopolitical experts on German and the EU energy policies. The main topics were (1) European natural-gas vulnerabilities in light of the Ukraine crisis and dependence on Russian supplies and (2) implications of Germany’s commitment to a transition to renewable energy called the Energiewende. Continue for Workshop PowerPoint & written Summary –> Continue reading
Posted in AICGS, Alternative energy, Energiewende, Energy and Environment, Energy and Geopolitics, Energy and Geostrategy, Euroepen Union, European Union, Gas globalization, Germany, Global Oil Market, Global Oil system, international relations, LNG, shale gas, shale oil, The USA, Tight oil, U.S. oil, Ukraine, unconventional energy
Tagged Berlin, Business and Economy, China, Energy, European Union, geopolitics, Germany, natural gas, OPEC, Thomas O'Donnell, United States, Washington
Presidents Rouhani of Iran and Putin of Russia holding discussions
(AICGS Analysis, by Tom O’Donnell) Since Russia’s president, Vladimir Putin, decided to annex Crimea and back east Ukrainian separatists with troops, many have worried he might use his “energy weapon” to counter U.S.-EU sanctions, as Russia supplies around a third of the EU’s natural gas imports. But what about Russian retaliation in the oil sector?
That’s hard to imagine. While gas is marketed in bi-lateral, pipeline-mediated relationships, oil is not. It’s liquid, fungible, and marketed in a unified open market—“the global barrel” [and name of this blog, T.O’D.]—which means there are no bi-lateral oil dependencies.
So, when EU leaders were cajoled by Germany’s Angela Merkel into joining the United States in applying sanctions, Russia could do little to retaliate from within the oil sector. In reality, it is the EU and the U.S., not Russia, that have an “oil weapon” in hand. And, the flurry of Russian oil diplomacy with OPEC, Iran and China over the past couple of weeks has a distinct whiff of desperation to it. Continue reading
Posted in AICGS, Aramco, China, Energy and Geopolitics, Energy and Geostrategy, Euroepen Union, Gas globalization, gas internationalization, Germany, Global Oil Market, Global Oil system, international relations, Iran nuclear, Iran sanctions, negotiations, Obama, Oil prices, OPEC, Putin, Rouhani, Russia, Sanctions, Saudi Arabia, shale oil, The USA, Ukraine, Venezuela oil
Tagged Ali Al-Naimi, Berlin, China, European Union, geopolitics, Germany, Iran, Middle East, natural gas, oil sector, OPEC, Putin, Sanctions against Iran, Saudi Arabia, United States, Venezuela, Vladimir Putin
Falling oil prices are not a US-EU-Saudi plot against Russia, Iran and Venezuela… though their effect is certainly not unwelcomed..Foto: REUTERS/Jim Bourg
[Printed in IP Journal, German Council on Foreign Affairs] Pin-pointing the reason for the dramatic – and continuing – fall in the price of oil is relatively easy: OPEC held its 166th conference in late-November 2014 to decide on a strategy to address oil prices, which had been falling at five to ten percent per month since July. Rather than pursue a production cut
Posted in Chavez, Energy and Geopolitics, Euroepen Union, Global Oil system, international relations, Iran nuclear, Oil prices, Oil supply, OPEC, PDVSA, Persian Gulf, Putin, Resource conflicts, Russia, Sanctions, Saudi Arabia, The USA
Tagged Ali Al-Naimi, Business and Economy, Chavez, Energy, geopolitics, Iran, Middle East, oil sector, OPEC, Petróleos de Venezuela, Rafael Ramírez, Saudi Arabia, United States, Venezuela, Washington
A wide-ranging interview on the “perfect storm” of low prices from low demand plus rising production, the Saudi market strategy and some geopolitical implications.
Posted in Aramco, Energy and Geopolitics, Energy and Geostrategy, Global Oil Market, Global Oil system, international relations, Iran sanctions, Iraqi oil, Libya, Oil prices, Oil supply, OPEC, Resource conflicts, Russia, Saudi Arabia, Saudi Arabit, shale oil, U.S. oil, Uncategorized
Tagged Ali Al-Naimi, Energy, geopolitics, Iraq, oil sector, OPEC, Saudi Arabia, Saudi market strategy
If you are in Washington, DC, this historical overview of the US-Iran Crisis and the role of oil might be of interest:
Posted in Global Oil Market, Global Oil system, international relations, Iran nuclear, Iran sanctions, Iraq, negotiations, Obama, P5+1, Persian Gulf, Resource conflicts, Rouhani, Sanctions, Saudi Arabia, Uncategorized
Tagged DC, Energy, historical overview, Iran, Iraq, Middle East, OPEC, Washington
Kiss between Rafsanjani and Saudi ambassador stirs controversy Former Iranian President, Ayatollah Hashemi Rafsanjani (R) exchanges greetings with the new Saudi Arabian ambassador to Iran, Abdulrahman Bin Groman Shahri in Tehran, Al Monitor, April 22, 2014. (photo by Twitter/ISNA)
Appreciation: I am honored to again be invited by my Iranian colleagues in New York, Professors Reza Ghorashi, Hamidah Zangeneh and Hamid Sedghi, to join this panel and discuss the geopolitics of US-Iranian relations. And, my thanks to Prof. Sedghi for reading my paper as I am teaching in Berlin and cannot be with you today. I only ask that those who dislike my message, kindly refrain from shooting the messenger.
The US-Iran nuclear confrontation finally appears close to resolution. This is because both Presidents Obama and Rouhani desire a diplomatic solution, and both countries need to move on. With such an agreement, it is possible that relations will slowly become normalized.
Of particular note—as a direct consequence—are the recent secret negotiations between Iran and Saudi Arabia towards a rapprochement. These were initially facilitated by Oman (e.g. see reports here, here, and here). Until very recently the Saudis had remained fiercely opposed to any US deal with Iran. However, the Saudi’s are realists, and know when it is time to adapt. Figure 1. is a photo of kisses exchanged on 22 April between ex-President Rafsanjani of Iran and King Abdullah’s ambassador to Iran, which caused quite a stir in the region. Agreements reached in these recently revealed negotiations have already significantly affected the presidential-succession crisis in Lebanon, sectarian conflicts in Iraq, and the conflict in Yemen. Next the two sides are expected to negotiate regarding their interests in the Syrian conflict.
In addition, the nature of the US-Saudi relationship is changing, transferring much more responsibility on the Kingdom and its Gulf partners for their own defense–albeit strongly supported with US weapons and logistics. This is part of the US disengagement from direct regional interventions, which will be significantly furthered by a successful US-Iran agreement (e.g., see here and here, and this report on Saudi defense buildup from Balfour at Harvard).
How are these new developments to be understood? Continue reading
Posted in Energy and Geopolitics, Energy and Geostrategy, Global Oil Market, Global Oil system, international relations, Iran nuclear, Iran sanctions, Iraq, Iraqi oil, negotiations, Obama, OPEC, P5+1, Persian Gulf, Rouhani, Sanctions, Saudi Arabia, Syria, The USA, U.S. oil, Uncategorized
Tagged Energy, Hassan Rouhani, Iran, Iraq, Middle East, Obama, oil sector, OPEC, Persian Gulf, Saudi, Saudi Arabia, Washington
Note: These “USA Oil Seminar” posts are extra readings for my students to better understand how US energy policy is developed and to hear the views of US experts. The seminar is: “The Global Oil System & US Policy” at JFK Institute of FU-Berlin.
- This Friday, watch live (or the recording later on): Is the U.S. a Rising Energy Superpower? Implications for Global Markets and Asia, the Middle East, Russia, and Europe. CSIS upcoming talk by Fereidun Fesharaki. FRIDAY, MAY 16, 2014 | 10:00 AM – 11:30 AM . Moderated by David Pumphrey.
- Read the paper: Fueling a New Order? The New Geopolitical and Security Consequences of Energy |April 15, 2014. By: Bruce Jones, David Steven and Emily O’Brien. Brookings Institute; Washington, DC.
BACKGROUND: This week, the class reading assignments are a couple conference papers I wrote a few years ago on the history and structure of today’s global oil system, and how it grew to replace the neo-colonial oil system. Continue reading
Posted in China, Energy and Geopolitics, Energy and Geostrategy, Euroepen Union, Gas globalization, Global Oil Market, Global Oil system, international relations, Latin America, LNG, Oil course, Oil prices, Oil supply, OPEC, Persian Gulf, Resource conflicts, Russia, Saudi Arabia, Seminar, shale gas, shale oil, The USA, Tight oil, Trade and Commerce, U.S. oil, unconventional energy
Tagged Bruce Jones, Business and Economy, China, David Pumphrey., David Steven, Energy, Fereidun Fesharaki, Global Oil System, Iran, Iraq, Latin America, Middle East, oil sector, OPEC, Persian Gulf, Saudi, Saudi Arabia, South China Sea, United States, Washington