The World’s Most Dangerous Man… Has a Terrifying Secret

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Saudi Crown Prince Mohammed bin Salman (MBS) has a secret.

No, it’s not that he was behind the horrific interrogation, torture and murder of journalist Jamal Khashoggi.

Although most people would argue otherwise.

The Crown Prince’s secret that I’m referring to isn’t even that he approved the use of chemical weapons by Saudi Arabia in its proxy war in Yemen. Continue reading

Saudis May Enter The Shale Game

 

Flooding the market has quickly emptied the kingdom’s checkbook

In case you missed the past three years, on Thanksgiving Day 2014, OPEC announced it would not cut oil production in the name of gaining customers and growing market share for its members (widely interpreted as Saudi Arabia).

That announcement set off a two + year global commodities price downturn that sent oil from triple digits all the way down to $26 and fostered two years of pain and indigestion in the shale beds of North America that companies are just now getting past. Continue reading

Russia Regains Status As China’s No.1 Crude Supplier

 

China imported daily average of 4.69 million tons, or 34.38 million bpd, of crude oil from Russia last month. That’s 9.3 percent more than the February average, putting Russia back at the top spot of China’s foreign oil suppliers, above Angola, which sits at number 2. Saudi Arabia fell to number 3 in March, as it cuts output deeper than it was expected to under the OPEC agreement from November.

The shuffle comes amid talks in OPEC about extending the six-month production output cut to further strengthen prices, which turned out to be less responsive to the international effort than expected. Continue reading

The End Of OPEC Is Near

 

OPEC, which has far exceeded the average life of cartels, is on the brink of failure. Though cracks have been developing in the cartel since the start of the current oil crisis, the group has managed to stay together so far. Nevertheless, the success of the current OPEC deal for production cuts will decide its future as a cartel.

What is a cartel?

A cartel is a group of like-minded producers, who act in concert—or collusion—to achieve a shared goal of increasing their profits by means of restricting supply, fixing prices, or destroying their competition by illegal means. The average life of the 20th Century cartels has been 3.7 to 7.5 years, according to various studies by Margaret Levenstein and Valerie Suslow. In the past two centuries, cartels have been able to influence prices by an average of 25 percent. Continue reading

Russia now a key force in the Middle East

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Russian President Vladimir Putin, center, and Turkish President Recep Tayyip Erdogan, right, at the World Energy Congress in Istanbul on Oct. 10. © AP

 

TOKYO — On Sept. 28, when OPEC made a surprise agreement to cut oil production, U.S. Secretary of State John Kerry had a heated phone conversation with his Russian counterpart, Sergey Lavrov. A cease-fire in Syria brokered by the U.S. and Russia was on the brink of collapse. Kerry and Lavrov would continue to talk during the following two days but in the end failed to keep the truce alive.

On Oct. 3, the U.S. government proclaimed bilateral peace talks regarding Syria dead.

Just like that, Russia has emerged as the decisive force in two situations reshaping Middle East politics — the Syrian civil war and oil prices.

Continue reading

Saudi Arabia’s Fake Surrender: Why The Oil Price War Is Still On

What do you do when everyone is bugging you to do something, but you don’t want to do it? The simple answer is that you make it look like you are doing something in order to get others off your back.

We should keep all this in mind when evaluating the latest reports that OPEC has agreed to cuts. Bloomberg tells us right up front that OPEC has merely agreed to the “outline of a deal” that will be taken up at its November meeting. Continue reading

Iran And China To Build Oil Terminal In Persian Gulf

News outlets in China and Iran have been reporting that the two nations have agreed to a joint venture in the Persian Gulf. The project is an oil terminal that will be constructed on Qeshm Island in the southern part of the Gulf. Continue reading

OPEC Is Winning The Price War Says IEA

Oil markets may not balance until late 2016, but supply is finally contracting in a big way.

Early last week the EIA confirmed that U.S. oil production was down sharply since peaking in April at 9.6 million barrels per day (mb/d). The agency estimates that U.S. output fell by 140,000 barrels per day in August, a steeper decline than in previous months. In its latest weekly estimate (which is less accurate than monthly retrospective estimates), U.S. oil production is now down to just 9.1 mb/d. Continue reading

Oil Find Near Gatwick May Be ‘World Class’

The estimated size of an oil find near Gatwick Airport has been upgraded to 100 billion barrels by a company backing exploration of the area.

UK Oil & Gas Investments (UKOG) said the Horse Hill-1 well in the Weald Basin was now thought to hold 158 million barrels per square mile.

In May 2014, the British Geological Survey estimated the Weald Basin to hold around 4.4 billion barrels of shale oil. Continue reading

Saudi Arabia in oil-price war with Iran, Russia

Riyadh avenging Moscow’s backing of nemeses Assad, Iran

WASHINGTON – Saudi Arabia is extending its own international jihad not only through its export of Wahhabism, an extreme form of Sunni Islam.

The Islamic kingdom is now going after Russia, a main backer of the kingdom’s sectarian opponent, Shiite Iran, by targeting its oil production clout to adversely impact the Russian economy.

Sources say the United States might even be colluding with Saudi Arabia to cause a dramatic drop in the international oil price in an effort to punish Russia not only for its support of rebels in Ukraine but for its backing of embattled Syrian President Bashar al-Assad as well as Iran.

The Saudi strategy is to flood the international market to harm the economies of Russia and Iran, both of which need the international price to be above $100 a barrel to break even. The price of oil today is less than $50 a barrel. Continue reading

Saudi prince: $100-a-barrel oil ‘never’ again

Saudi billionaire businessman Prince Alwaleed bin Talal told me we will not see $100-a-barrel oil again. The plunge in oil prices has been one of the biggest stories of the year. And while cheap gasoline is good for consumers, the negative impact of a 50% decline in oil has been wide and deep, especially for major oil producers such as Saudi Arabia and Russia. Even oil-producing Texas has felt a hit. The astute investor and prince of the Saudi royal family spoke to me exclusively last week as prices spiraled below $50 a barrel. He also predicted the move would dampen what has been one of the big U.S. growth stories: the shale revolution. In fact, in the last two weeks, several major rig operators said they had received early cancellation notices for rig contracts. Companies apparently would rather pay to cancel rig agreements than keep drilling at these prices. His royal highness, who has been critical of Saudi Arabia’s policies that have allowed prices to fall, called the theory of a plan to hurt Russian President Putin with cheap oil “baloney” and said the sharp sell-off has put the Saudis “in bed” with the Russians. The interview has been edited for clarity and length.

Q: Can you explain Saudi Arabia’s strategy in terms of not cutting oil production?

A: Saudi Arabia and all of the countries were caught off guard. No one anticipated it was going to happen. Anyone who says they anticipated this 50% drop (in price) is not saying the truth. Continue reading

US poised to become world’s leading liquid petroleum producer

The US is overtaking Saudi Arabia to become the world’s largest producer of liquid petroleum, in a sign of how its booming oil production has reshaped the energy sector.

US production of oil and related liquids such as ethane and propane was neck-and-neck with Saudi Arabia in June and again in August at about 11.5m barrels a day, according to the International Energy Agency, the watchdog backed by rich countries.

With US production continuing to boom, its output is set to exceed Saudi Arabia’s this month or next for the first time since 1991. Continue reading

Market report: Citi warns of geopolitical tremors

Investors’ “indifference” to the threats “is unlikely to last”, the US bank has warned

On what was the worst day for the FTSE 100 since March, Citigroup sounded an ominous warning for investors.

Geopolitical risks, including the rise of jihadist extremists in the Middle East and simmering tensions between Russia and the West, are “proliferating”, said analysts at the US bank, while investors’ “indifference” to the threats “is unlikely to last”.

Citi’s timing was apt. Geopolitical factors helped to drive the 97.55-point fall to 6,676.08 suffered by London’s benchmark index, with brokers citing the air strikes in Syria by the US and its allies as a reason for the sell-off, as well as the downing of a Syrian fighter jet by Israel.

Continue reading

ISIS Makes Up To $3 Million a Day Selling Oil, Say Analysts

For two weeks, the Islamic State of Iraq and Syria (ISIS) and forces loyal to Bashar al-Assad have been battling for control of the Shaar gas field, one of Syria’s largest, near the landmark city of Palmyra. On July 19, it was reported that the Sunni militant group had killed 270 regime fighters, taking control of the field in what was reportedly one of the conflict’s deadliest 48-hour periods to date.

As ISIS steams further into Syria, analysts say a significant portion of its financial resources come from the crude oil it sells on the black market; accordingly, oil fields have become prime targets in the fight. So do gas fields like Shaar, where disruption of lines lead to electricity shortages and power cuts in regime-controlled areas as far as Damascus. Continue reading

Europe fails to tap Caspian Sea’s surging gas supplies

European countries are losing out to China in their quest to source natural gas from the Central Asian states.

Moving away from dependence on Russia and Middle East hydrocarbons was a key energy objective of European countries in the 1990s, and the oil and natural gas resources along the Caspian Sea was seen as a vital alternative.

Instead, European oil dependence on Russia and the Middle East has grown from 75% in 2000 to 84% by 2010. In addition, EU reliance on gas imports has also risen from 49% to 62% during the period. Continue reading