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Yahoo
03-06-2025
- Business
- Yahoo
Is A New Oil Price War Between The West And OPEC About To Break Out?
It is highly unlikely that anyone with even a modicum of intelligence has lost money in the past ten years or so by trading against the predictable thinking of those in charge of Saudi Arabia's oil policy. Quite the reverse, in fact, with enormous profits available from the failures of the enormously well-flagged and exceptionally predictable strategy of the 2014-2016 and 2020 Oil Price Wars -- launched by the Kingdom with the intention of destroying or disabling the U.S. shale oil sector, as analysed in full in my latest book on the new global oil market order. As OPEC members and their toxic companion in the OPEC+ formation, Russia, mull keeping oil production on the high side of recent historical averages, the key question for the oil markets is -- surely they are not going to launch another oil price war using the same strategy as failed twice before? It is apposite here to recall the reasons for the failure of the two previous oil price wars since 2014. The first (2014-2016) was based on Saudi Arabia's belief – shared by many in the oil market at the time, it must be said -- that U.S. shale oil producers had a breakeven price point of US$70 per barrel (pb) of for the West Texas Intermediate benchmark. Therefore, the Saudis reasoned, if the price of oil was pushed below that level for long enough -- by it and its fellow OPEC members dramatically increasing production while demand in the global market was predicted to remain around the same level for some time -- then many of the new U.S. shale oil producers would go bankrupt. Any others would have to cease production at such uneconomic price levels and shelve future investment plans aimed at boosting their production even more. So confident was Saudi Arabia of the success of its strategy that shortly after the onset of the 2014-2016 Oil Price War, senior figures in its government and oil ministry it held a series of private meetings in New York to tell them in detail about the strategy it was to use and how well it would go, as also detailed in full in my latest book. At these meetings, the Saudis revealed that, far from looking to keep prices high – as had also been the usual inclination of OPEC for many years to boost the prosperity of member states – it was willing to tolerate 'much lower' Brent prices 'of between USD80-90 pb for a period of one to two years or even lower prices if necessary'. According to several sources at the New York meeting exclusively spoken to by at the time, the Saudis made it clear that it aside from destroying the then-nascent U.S. shale sector, the Oil Price War also aimed to re-impose a degree of supply discipline on other OPEC terms of the first objective, the initial signs augured well for a Saudi victory. The U.S. oil rig count in January/February 2015 saw its biggest period-on-period fall since 1991, and the gas rig count fell substantially at that time as well. According to industry figures as at the end of the first quarter of 2015, around one third of the 800 oil and gas projects (worth US$500 billion and totalling nearly 60 billion barrels of oil equivalent) scheduled for final investment decisions in that year were unconventional and were subject to possible postponement or cancellation. Over the year as a whole, output from the U.S. shale producers typically fell by by around 50%, forcing them to cut investment to approximately US$60 billion over the year, compared to the US$100 billion or so spent in 2014. Crucially, though, from around that point the U.S. shale sector reorganised into a meaner, leaner, lower-cost production machine that could – at that time – broadly survive and profit at WTI prices above around US$35 pb from above US$70 pb previously. They managed to achieve this mainly through the advancement of technology that enabled them to drill longer laterals, manage the fracking stages closer and maintain the fracks with higher, finer sand to allow for increased recovery for the wells drilled, in conjunction with faster drill times, as industry experts old back then. These operations gained further cost benefits from multi-pad drilling and well spacing theory and practice. During this period, Saudi Arabia had moved from a budget surplus to a then-record high deficit in 2015 of US$98 billion and it had spent at least US$250 billion of its precious foreign exchange reserves over that period that even senior Saudis said was lost forever. Moreover, according to International Energy Agency estimates, OPEC member states collectively at least US$450 billion in revenues during the 2014-2016 Oil Price War. The 2020 Oil Price War – using exactly the same overproduction strategy as before -- failed less through the long-term effects of misjudging the effectiveness of the U.S. shale producers and more through the direct political intervention of its then first-term President Domald Trump. Given the potentially disastrous economic and political consequences for the U.S. and its sitting president of sharp and sustained rises in oil – and crucially, gasoline – prices, as also analysed in full in my latest book, Trump began by warning Saudi Arabia repeatedly that the U.S. would not tolerate any sustained threat to its shale oil sector (and, by extension, to its economy and its domestic political landscape) – in speeches and tweets and in the increasingly close-run legislative passage of the 'NOPEC Bill'. He also directly warned Saudi Arabia's King Salman bin Abdulaziz Al Saud that the U.S. might withdraw U.S. military support for the Al Sauds, and by extension to Saudi Arabia, with the additional observation that: 'He [King Salman] would not last in power for two weeks without the backing of the U.S. military.' With no sign by the end of March 2020 that the Saudis were going to cease the war, Trump clearly and specifically told de facto Saudi ruler Crown Prince Mohammed bin Salman over the telephone on 2 April that unless OPEC started cutting oil production – so allowing oil prices to rise above the danger zone for U.S. shale oil producers – that he would be powerless to stop lawmakers from passing legislation to withdraw U.S. troops from the Kingdom, according to a very senior source in the White House exclusively spoken to by a the time. Oil production consequently came back down again, and the 2020 war had ended. As of now, the low breakeven cost resilience of the U.S. shale sector is not quite the same as it was before. The recent Dallas Fed Energy Survey suggests that it is around US$65 pb for new wells drilled, although for existing wells it is significantly lower. It is also true that the lifting cost of oil in Saudi Arabia has also risen since 2014 from around US$1-2 pb, but it is still only about US$3-5 pb now. However, the Kingdom's 2025 fiscal breakeven price per barrel of the Brent crude benchmark is a minimum of US$90.9, according to IMF figures. Consequently, it can no better afford a major, sustained fall in oil prices now than it could in either 2014-2016 or in 2020. With Trump back in the White House, it is also no better off politically either. Indeed, with Republicans majorities in both houses, it is worse positioned to deal with the likely threats and actions that Trump would use against it if it went head-to-head with the U.S. again. Instead, according to a senior energy source who works closely with the U.S. Presidential Administration, Washington believes the Saudis will take a modulated approach to further oil production increases, in tandem with the U.S. 'Oil prices at the lower end of recent historical averages suit the U.S. from an inflationary perspective, as long as they don't go too low, and Washington has made this clear to the Saudis,' he said. In fact, these conversations were part of the dialogue that U.S. officials had with their Saudi counterparts during Trump's visit to Saudi Arabia on 13 May to sign a broad-based economic agreement between the two countries. 'There are longer-term financial and security benefits for the Saudis in taking this softer approach, even if oil is below the number they want for their budget in the shorter-term, and to bridge the gap they will have no problem in borrowing more in the capital markets,' he concluded. By Simon Watkins for More Top Reads From this article on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
05-05-2025
- Automotive
- Yahoo
Gas in Michigan jumps 17 cents a gallon in a week, despite falling oil prices
Michigan gas prices jumped up in the past week, landing at $3.21 a gallon, an average increase of 17 cents. The gas prices went up as oil prices went down and the president repeated a claim in a "Meet the Press" interview that aired on Sunday that he had brought gas prices "down to $1.98 in many states." Adrienne Woodland, a spokeswoman for the AAA auto club, which tracks prices, said Monday that "drivers across Michigan are seeing higher prices at the pump as we enter the month of May." Still, the price was 5 cents less than a month ago and 40 cents less than a year ago. Metro Detroit's gas price average was $3.17 a gallon, with the highest gas price averages in Lansing, $3.27; Saginaw, $3.26 and Grand Rapids, $3.25; and the lowest in Traverse City, $3.02; Marquette, $3.16 and Jackson, $3.16. About half the retail cost of gasoline is made up by crude oil prices, the American Petroleum Institute estimates; and crude oil prices have been trading down as gas demand in the United States has decreased. Other factors that affect gasoline prices are: refining costs, about 25%; distribution and marketing costs, 11%; and federal and state taxes, 14%, according to the oil and natural gas industry trade group. West Texas Intermediate, a benchmark representing oil produced in the United States, has been trading below $60 a gallon, a $ 4-a-barrel drop from a week ago. But some analysts have said that could be a sign of looming economic trouble. While low oil prices tend to translate to lower gas prices, in countries that produce and export oil, like the United States, it also, noted, can "lead to job losses, reduced tax revenues and broader economic consequences." The energy publication added that falling oil prices also could "worsen the U.S. trade deficit — the very thing that tariffs are supposedly being used to fix," and it added, "the loudest advocates for tariffs — arguing they'll fix our trade imbalance — are also cheering falling oil prices." President Donald Trump has largely dismissed concerns on "Meet the Press," telling moderator Kristen Welker in an interview from his Mar-a-Lago home in Palm Beach, Florida, that "many businesses are being helped" by the tariffs. He said gas prices are falling, repeatedly claiming throughout the broadcast that the prices "are down at tremendous numbers for gasoline," and are "down to $1.98 in many states right now." More: Gas prices fall below $3 a gallon in Michigan, but analysts warn drop may not last Later in the NBC show, one of the show's roundtable guests, Democratic strategist Symone Townsend, challenged Trump's remarks, noting that "nowhere in this country is gas $1.98." The average price of gas on Sunday was $3.17 a gallon nationally, according to AAA, and GasBuddy, which tracks prices at more than 150,000 stations, told CBS News in late April that it was aware of no station in the nation selling gas at $1.98 a gallon. Contact Frank Witsil: 313-222-5022 or fwitsil@ This article originally appeared on Detroit Free Press: Gas prices in Michigan rise as oil prices fall
Yahoo
02-05-2025
- Business
- Yahoo
U.S. Targets Iraq in Crackdown on Iranian Energy Trade
Although the 'No Iranian Energy Act' was introduced to U.S. lawmakers on April Fools' Day it is no joke as far as the Americans are concerned and the Iraqis will find little cause for merriment in its contents either. As highlighted by Chairman of the Republican Study Committee, Congressman August Pfluger, this legislation is part of President Donald Trump's maximum pressure campaign against Iran's leaders. '[These] are the world's most dangerous state sponsors of terrorism, [and] the Iranian regime is not just a threat, its leaders are a genocidal death cult,' he said. The proposed Act will definitively sanction the importation of Iranian natural gas to Iraq, which has for many years formed the foundation of the country's domestic power sector. Indeed, gas and electricity imports from Iran has historically comprised around 40% of all Iraq's energy needs. An adjunct piece of legislation – the 'Iran Waiver Rescissions Act' -- would permanently freeze Iranian-sanctioned assets everywhere including Iraq and prohibit any standing or future U.S. President from using any waiver authority to lift the sanctions. The only surprise in any of this to dedicated Middle East watchers is that such decisive action was so long in coming. The onset of the Iraq's perennial game of lying to the U.S. about its intentions over Iran in exchange for money had become as familiar a seasonal landmark for as the first cuckoo of spring. The game itself would begin with whoever was Iraq president at the time flying off to Washington at some point in early August to meet with his U.S. counterpart whereupon he would tell the Americans that Iraq was done with relying on Iran for its domestic power needs and would begin the process of tapering down this dependence as soon as possible. In order to do this Iraq would need a little time, so another waiver to keep importing these things from Iran would be required, and also it would need some interim funding to put itself in a better financial position to deal with the fallout from this process. Once the billions of dollars subsequently handed over to Iraq from the U.S. had been moved by Iraq to somewhere in Northern Cyprus that no one could touch them, then Baghdad would sign another long-term deal with Iran to keep importing its gas and electricity in the same amounts as it has always problem here was that the more this game persisted, the less fun it was for many in various U.S. administrations. Evidence of how unfunny this had become to some close to the action was seen from the then-State Department spokesperson Morgan Ortagus following the signing in mid-2020 of a two-year contract for Iraq to keep taking Iranian gas and electricity (the longest period ever at that point). Ortagus furiously rattled of swingeing new sanctions on 20 Iran- and Iraq-based entities, citing them as being instruments in the funnelling of money to Iran's Islamic Revolutionary Guards Corps' (IRGC) elite Quds Force, which was absolutely true. She added that the 20 entities were continuing to exploit Iraq's dependence on Iran as an electricity and gas source by smuggling Iranian petroleum through the Iraqi port of Umm Qasr and money laundering through Iraqi front companies, which was also true. And she added that Washington was extremely concerned that Iraq was continuing to act as a conduit for Iranian oil and gas supplies to make their way out into the world's major export markets. This was entirely correct as well, had been going on for years, and was indeed the key reason why Iran was still able to function effectively as an economy and a global threat of terror despite sanctions of varying severity being placed upon it since the Islamic Revolution of 1979. It was a couple of things in particular about Iraq that Iran found invaluable in this context and still does. The first was that the shared oil reservoirs straddling Iraq and Iraq have always made it impossible to determine from which side non-sanctioned 'Iraqi oil' was actually taken, as analysed in full in my latest book on the new global oil market order. Even if the Americans or their trusted appointees stationed people at every single rig in every single shared field in Iraq they would not be able to tell if the oil coming out it was from the Iraq side or the Iranian side. Notable examples of shared reservoirs and fields are Iran's Azadegan oil reservoir (split into North and South fields) that is exactly the same reservoir upon which sits Iraq's Majnoon oilfield. The same feature applies to Azar (on the Iran side)/Badra (on the Iraq side), Yadavaran (Iran)/Sinbad (Iraq), Naft Shahr (Iran)/Naft Khana (Iraq), Dehloran (Iran)/Abu Ghurab (Iraq), West Paydar (Iran)/Fakka/Fauqa (Iraq), and Arvand (Iran)/South Abu Ghurab (Iraq). The second factor was that with oil from even non-shared fields, barrels drilled from sanctioned Iranian wells could simply be relabelled as non-sanctioned Iraqi oil and then forwarded on that basis. The geographical location of Iraq makes it an ideal hub for transport of oil by road into Europe via Turkey, or to the Mediterranean Sea. Or the Iranian oil rebranded as Iraqi could be driven to ports for onward loading to ships and then moved anywhere that way. Once at the ports and ready for loading onto tankers, the documentation on the country of origin of the oil is easily changed to show that it comes from Iraq and not Iran. Iran's own former Petroleum Minister, Bijan Zanganeh, publicly highlighted this very practice when he said in 2020: 'What we export is not under Iran's name -- the documents are changed over and over, as well as [the] specifications.' Once onboard the tankers, the obfuscation of the true source of the oil could continue, with another reliable sanctions side-stepping technique being the disabling of the 'automatic identification system' on ships that carry Iranian oil. This makes tracking such vessels much more difficult. Compounding this – particularly useful for oil being moved to China -- is the common practice of at-sea or just-outside-port transfers of Iranian oil onto tankers flying the flags of a local Asian country, with Malaysia and Indonesia having long been favoured by Iran and Iraq in this regard, as also detailed in my latest book. So well-developed and effective did these methods become that they were a matter of great national pride for Iran, with its then-Foreign Minister, Mohammad Zarif, stating in December 2018 at the Doha Forum that: 'If there is an art that we have perfected in Iran, [that] we can teach to others for a price, it is the art of evading sanctions.' As much of this 'art' involved Iran using Iraq as its cover, the U.S.'s new legislation is likely to mark a turning point in Washington's and the West's bid to re-assert influence in the heart of the Middle East at the expense of China. Earlier sanctions, when applied to Iraq, saw little slowing down in the rate at which Beijing was able to increase its hold over the country's vast oil resources. New exploration and development deals, plus many smaller 'contract-only' awards connected to other major fields, have continued apace, to the degree that over a third of all Iraq's proven oil and gas reserves and over two-thirds of its current production are managed by Chinese companies, according to industry figures. More specifically, Chinese firms combined have direct shares in around 24 billion barrels of reserves and are responsible for the production of around 3.0 million bpd. However, such sanctions as were brought against Baghdad were fragmented and occasional, rather than coherent and sustained as the current plans portend. Moreover, recent months have seen advances by the U.S. and its allies in securing major new deals in Iraq, with TotalEnergies' US$27 billion four-pronged deal being one case in point and BP's US$25 billion oil field deals in the north being another. Tellingly, perhaps, it is to the U.S.'s Schlumberger that Iraq has now turned to advance the long-stalled development of Iraq's strategically critical Akkas gas field. Discovered in 1992, it contains around 5.6 trillion cubic feet of natural gas deposits and is the country's largest natural gas site. However, its true value is in being part is one of three big gas fields that form a skewed triangle across southern Iraq, stretching from the Mansuriya field near the eastern border with Iran, down to Siba field in the south (extremely close to the key Iraqi Basra export hub), and then all the way west across to Akkas itself (extremely close to the border with Syria). By Simon Watkins for Read this article on
Yahoo
30-04-2025
- Business
- Yahoo
Why ConocoPhillips, Chevron, and Cheniere Energy Stocks All Dropped Today
US GDP contracted in Q1, spooking investors. Oil prices are down, and one major LNG play just caught an analyst downgrade. Oil and gas is a cyclical industry and picking an entry point is tricky. A weak report on the U.S. economy sparked a sell-off in stocks this morning. U.S. GDP declined at an annualized 0.3% in Q1 2025. Since economists had been forecasting 0.4% GDP growth, this came as something of a disappointment. Green energy efforts notwithstanding, the U.S. economy still largely runs on oil, and worries about a slowdown are weighing on oil and gas stocks as a result. reports WTI crude oil prices are down 1.4% today to about $59.50 per barrel. Brent crude is likewise down about 1.4% at about $63.30. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » ConocoPhillips (NYSE: COP) stock was down 2% at the 11:30 a.m. ET mark, while Chevron (NYSE: CVX) was down 2.2%. Liquefied natural gas exporter Cheniere Energy (NYSE: LNG) was taking it even more on the chin with a 3.6% loss before noon. Should oil and gas stock investors be reacting this harshly to GDP worries, though? That depends. The U.S. Energy Information Administration notes that crude inventories in the U.S. shrank by 2.7 million barrels over the past week, seemingly contradicting yesterday's report from the American Petroleum Institute that inventories were up. Logically, rising inventories (rising supply) should mean falling prices. However, falling inventories (less supply), given constant demand, should mean that oil prices will rise. Given the conflicting reports on supply, investors today seem to be looking to the GDP report as a tie-breaker, and assuming that if the economy is shrinking, so too will demand for oil, weakening prices in the future no matter what's going on with supply today. At the same time, the situation with investors' feelings about Cheniere is much easier to explain. This morning, Wolfe Research downgraded Cheniere stock to "peer perform" (i.e. hold) on worries that the company's competitors are expanding supplies of LNG, putting "downward pressure on returns on growth projects," according to a report by The combination of generalized energy market worries, plus a downgrade specific to Cheniere, explains why this particular stock is responding worse than most. So how should an individual investor parse all of the above? Oil and gas is a famously cyclical industry in which undersupply and high prices lead to overinvestment to capture the excess profits, which in turn leads to oversupply and low prices, which causes investment to get cut back until prices revive. This happens over and over. As such, if you want to make money in oil and gas stocks, you must think long term. In the case of the three stocks I'm looking at today: Chevron, which costs more than 14 times trailing earnings, pays a 4.9% dividend yield, and is expected to grow at nearly 8% annually over the next five years. ConocoPhillips, which costs less than 12 times trailing earnings, pays only a 3.4% dividend yield, and is only expected to grow earnings at 6%. Cheniere Energy, which costs nearly 17 times earnings, pays a meager 0.8% dividend yield, and is also sitting at an earnings peak, with profits expected to be lower than last year's for the next three years. This decision is easy. Chevron stock looks like the closest thing to a bargain at a total return ratio of just over 1.0. Conoco looks cheaper than Chevron based solely on its P/E ratio, but neither its dividend nor its growth rate measure up to its rival. And Cheniere looks just plain unattractive to me, full stop. Twist my arm and ask me to choose between just these three energy stocks, therefore, and I'd have to go with Chevron. Before you buy stock in Chevron, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Chevron wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $607,048!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $668,193!* Now, it's worth noting Stock Advisor's total average return is 880% — a market-crushing outperformance compared to 161% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 28, 2025 Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cheniere Energy and Chevron. The Motley Fool has a disclosure policy. Why ConocoPhillips, Chevron, and Cheniere Energy Stocks All Dropped Today was originally published by The Motley Fool
Iraq Business
26-04-2025
- Business
- Iraq Business
Iraq's Path to Energy Security is Taking Shape
By James Durso for the Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News. Iraq's Path to Energy Security is Taking Shape Iraq is moving to achieve energy security by diversifying its energy sources and reducing reliance on imports of Iranian electricity and natural gas. A warning that expeditious action is needed was the removal of the U.S. sanctions waiver that allowed Iraq to import electricity from Iran. Click here to read the full report.
