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The Age
15-05-2025
- Business
- The Age
Trump and the oil cartel are on a collision course
The US onshore oil sector is particularly sensitive to oil prices. While break-even prices vary significantly between the basis, the rule of thumb is that they generally need something above $US60 a barrel to break even on new wells and $US65 a barrel or more to generate profits attractive enough to provide an incentive to drill. Oil prices have demonstrated acute sensitivity to Donald Trump's trade policies. After Trump's 'Liberation Day,' global oil prices plummeted, with Brent crude tumbling from around $US75 a barrel to less than $US60 a barrel. The US domestic price, the West Texas Intermediate (WTI), fell to as low as $US55 a barrel. After Trump paused his 'reciprocal' tariffs and agreed a 90-day truce with China, with big cuts to the tariff rates, oil prices have recovered, with Brent trading around $US66 a barrel and WTI around $US62 a barrel. Not helping the position of the US producers is the impact on Trump's tariffs on steel and steel products, cement and drilling fluids. A leading energy consultancy, Wood Mackenzie, says costs will have risen 4.5 per cent by the fourth quarter of this year as a result of those tariffs, which remain in place. The firm expects the cost of the steel pipes used in drilling, production and completion of wells to rise by 40 per cent and be the major contributor to the overall cost increases. So, the 'prices down, costs up' outlook will lead to less investment and less future production. That may be one of the objectives that the Saudi-led OPEC is pursuing. OPEC+ has embarked on a U-turn in its strategy this year. For three years it restrained production. It took a total of about 6 million barrels a day of oil out of the market via production cutbacks over that period, with the Saudis bearing the brunt of those cutbacks – they contributed about 1 million of the 2.2 million barrels a day of 'voluntary' cutbacks announced in late 2023 for last year's production targets. This year the cartel has started returning some of that curtailed production to the market. The original plan was to do it incrementally through to September next year. Instead, after announcing an increase in output of 38,000 barrels a day in April OPEC suddenly ramped that up to 411,000 barrels a day for May and then, earlier this month, announced a similar increase for June. In just over three months it will have added nearly half the volume that it had planned to add over 18 months. Loading The primary motivation for that increase, which has been led by the Saudis, is to respond to over-production from members of the cartel who haven't honoured their commitments -- Kazakhstan and Iraq in particular – and have produced at rates above their agreed caps. The Saudis, having shouldered the bulk of the burden of reduced production, have had enough and are prepared to live with the lower prices – well below the estimated $US90 a barrel or so needed to balance their budget – in exchange for the bigger volumes and the opportunity to discipline the recalcitrant members of the cartel. The ancillary benefit is the impact it has on the US, where shale has made it the world's largest oil producer. Driving the prices down will, as its own forecasts suggest, drive some shale producers out of the market and lower the US industry's global market share, albeit that the shale sector is very flexible and innovative and has a greater ability to turn its production off and on than traditional producers. The 2014 oil price collapse, triggered by a big surge in OPEC supply, saw oil trade below $US30 a barrel. It ignited a wave of bankruptcies in the US shale sector. As soon as the price stabilised, however, production sprang back, with significantly lower costs. Trump's trade war, even if its severity is scaled back after the 90-day pauses on the reciprocal tariffs and China end, is depressing both global economic activity and the growth rate of the US economy. The US economy grew 2.8 per cent last year. OPEC is forecasting growth of only 1.7 per cent this year. Despite that lower growth in prospect, OPEC, pointing to last weekend's temporary truce between the US and China, says there is potential for more lasting agreements and a normalisation of trade flows, albeit at potentially elevated tariff levels compared to the pre-Liberation Day escalation of trade hostilities. Loading Nevertheless, it has left its forecasts for the increase in global oil demand this year unchanged at 1.3 million barrels a day and downgraded them only slightly, to 1.218 million barrels a day, for next year. By comparison, the International Energy Agency has forecast an increase of only 726,000 barrels a day. If the US and the non-OPEC producers don't reduce their output heavily this year, OPEC+ producers continue to unwind their production cuts at the current rate and the impact of the US trade policies continue to chill global economic activity, there is a very real prospect of as glut of oil developing and another big slump in prices. Trump will get his lower prices in those circumstances, which would help modestly offset the impact of his tariffs on inflation. What he wouldn't get is the boom in the shale oil sector that was supposed to be a key plank in his economic strategy.
Sydney Morning Herald
15-05-2025
- Business
- Sydney Morning Herald
Trump and the oil cartel are on a collision course
The US onshore oil sector is particularly sensitive to oil prices. While break-even prices vary significantly between the basis, the rule of thumb is that they generally need something above $US60 a barrel to break even on new wells and $US65 a barrel or more to generate profits attractive enough to provide an incentive to drill. Oil prices have demonstrated acute sensitivity to Donald Trump's trade policies. After Trump's 'Liberation Day,' global oil prices plummeted, with Brent crude tumbling from around $US75 a barrel to less than $US60 a barrel. The US domestic price, the West Texas Intermediate (WTI), fell to as low as $US55 a barrel. After Trump paused his 'reciprocal' tariffs and agreed a 90-day truce with China, with big cuts to the tariff rates, oil prices have recovered, with Brent trading around $US66 a barrel and WTI around $US62 a barrel. Not helping the position of the US producers is the impact on Trump's tariffs on steel and steel products, cement and drilling fluids. A leading energy consultancy, Wood Mackenzie, says costs will have risen 4.5 per cent by the fourth quarter of this year as a result of those tariffs, which remain in place. The firm expects the cost of the steel pipes used in drilling, production and completion of wells to rise by 40 per cent and be the major contributor to the overall cost increases. So, the 'prices down, costs up' outlook will lead to less investment and less future production. That may be one of the objectives that the Saudi-led OPEC is pursuing. OPEC+ has embarked on a U-turn in its strategy this year. For three years it restrained production. It took a total of about 6 million barrels a day of oil out of the market via production cutbacks over that period, with the Saudis bearing the brunt of those cutbacks – they contributed about 1 million of the 2.2 million barrels a day of 'voluntary' cutbacks announced in late 2023 for last year's production targets. This year the cartel has started returning some of that curtailed production to the market. The original plan was to do it incrementally through to September next year. Instead, after announcing an increase in output of 38,000 barrels a day in April OPEC suddenly ramped that up to 411,000 barrels a day for May and then, earlier this month, announced a similar increase for June. In just over three months it will have added nearly half the volume that it had planned to add over 18 months. Loading The primary motivation for that increase, which has been led by the Saudis, is to respond to over-production from members of the cartel who haven't honoured their commitments -- Kazakhstan and Iraq in particular – and have produced at rates above their agreed caps. The Saudis, having shouldered the bulk of the burden of reduced production, have had enough and are prepared to live with the lower prices – well below the estimated $US90 a barrel or so needed to balance their budget – in exchange for the bigger volumes and the opportunity to discipline the recalcitrant members of the cartel. The ancillary benefit is the impact it has on the US, where shale has made it the world's largest oil producer. Driving the prices down will, as its own forecasts suggest, drive some shale producers out of the market and lower the US industry's global market share, albeit that the shale sector is very flexible and innovative and has a greater ability to turn its production off and on than traditional producers. The 2014 oil price collapse, triggered by a big surge in OPEC supply, saw oil trade below $US30 a barrel. It ignited a wave of bankruptcies in the US shale sector. As soon as the price stabilised, however, production sprang back, with significantly lower costs. Trump's trade war, even if its severity is scaled back after the 90-day pauses on the reciprocal tariffs and China end, is depressing both global economic activity and the growth rate of the US economy. The US economy grew 2.8 per cent last year. OPEC is forecasting growth of only 1.7 per cent this year. Despite that lower growth in prospect, OPEC, pointing to last weekend's temporary truce between the US and China, says there is potential for more lasting agreements and a normalisation of trade flows, albeit at potentially elevated tariff levels compared to the pre-Liberation Day escalation of trade hostilities. Loading Nevertheless, it has left its forecasts for the increase in global oil demand this year unchanged at 1.3 million barrels a day and downgraded them only slightly, to 1.218 million barrels a day, for next year. By comparison, the International Energy Agency has forecast an increase of only 726,000 barrels a day. If the US and the non-OPEC producers don't reduce their output heavily this year, OPEC+ producers continue to unwind their production cuts at the current rate and the impact of the US trade policies continue to chill global economic activity, there is a very real prospect of as glut of oil developing and another big slump in prices. Trump will get his lower prices in those circumstances, which would help modestly offset the impact of his tariffs on inflation. What he wouldn't get is the boom in the shale oil sector that was supposed to be a key plank in his economic strategy.
West Australian
08-05-2025
- Business
- West Australian
Strickland eyes Serbian gold-base metal resource lift after big hits
Strickland Metals has kicked off its 2025 Serbian exploration campaign in style, striking a pair of thick, high-grade hits including a standout 66.8-metre section grading 2.7 grams per tonne (g/t) gold equivalent at its Shanac deposit, which is part of the company's monster 7.4-million-ounce gold equivalent Rogozna project. The company's first two drill holes both punched into huge, mineralised zones up to 265m wide, which were each laced with large high-grade sweetener sections. The first hole went straight through the guts of Shanac's main mineralised zone - dubbed the Central Domain - and didn't disappoint. It returned a monster gold equivalent intercept of 251.6m at 1.3g/t from 341.9m, including a sizzling 58.1m at 2.3g/t gold equivalent and some mouth-watering subzones peaking at 6.7g/t gold equivalent. A second hole was drilled about 100m to the northeast of the first. It hit an equally impressive gold equivalent section of 265.0m grading 1.2g/t from 366.1m, with a juicy 66.8m hit going 2.7g/t gold equivalent from 423.8m and topping out at 7.5g/t gold equivalent over 1.3m. The surprise strike from hole two lit up the western flank of the Central Domain – an area previously thought to be lower grade or even barren – and has offered the company the tantalising prospect of further high-grade extensions. Notably, the richer zones in both holes graded more than 50 per cent higher than the rest of the deposit, which has blown Strickland's geological model at Shanac wide open. The company says the latest results served up plenty of food for thought and a serious resource upgrade at Shanac could now be firmly on the menu. Assays are still pending for two more holes from the deposit. The Shanac deposit already hosts 150 million tonnes grading 1.1g/t in gold, copper, lead, zinc and silver credits for a 5.3-million-ounce gold equivalent resource. It is just one piece of Strickland's larger Rogozna puzzle, which includes other advanced deposits such as Medenovac, which has a 1.28M-ounce gold equivalent resource, and the 810,000-ounce gold equivalent Copper Canyon deposit. Strickland now has a total of six diamond rigs hammering out the metres at Rogozna, including one at Shanac and four at its exciting gold-only Gradina prospect, where it is hopes to deliver a maiden resource later this year. A sixth truth teller is sticking holes into the company's exciting Kotlovi prospect to follow up on a 2024 discovery hole, which struck a 12m intercept grading 5.7g/t gold, within a larger section of 40.3m running at 2.6g/t gold from 558m. Strickland is sitting on a war chest of nearly $34.8 million as of March 31, which was topped up when the $US60 billion Chinese mining giant Zijin Mining threw an additional $5M into the pot. With Zijin Mining on the register, Strickland has a serious heavyweight in its corner and it's not hard to see why that's big news. Zijin can deliver Strickland with its global firepower and some deep local clout, particularly in Serbia, where it's already a dominant player. Zijin runs the massive Čukaru Peki and Bor copper-gold operations in Serbia, which host a jaw-dropping 34Mt copper and 29M ounces gold in the ground. The two mines pumped out 300,000t of copper and 250,000 ounces of gold in 2024 to cement Zijin's status as a powerhouse in the region. With momentum building, rigs humming and some high grades rolling in, Strickland appears on track for a transformational year in Serbia. Is your ASX-listed company doing something interesting? Contact:
Yahoo
07-05-2025
- Automotive
- Yahoo
I-69 ORX construction bringing long-term lane closure to US 60
HENDERSON, Ky. (WEHT) – Drivers on US 60 just east of Henderson will have to get used to more lane closures and a new traffic pattern as work continues on the future US 60/I-69 interchange. Beginning Saturday May 10, US 60 will be down to one shared lane between Tillman Bethel Road and Morris Drive, where two temporary traffic signals will be located to allow east and westbound traffic to flow. Flags and crosses coming back to Central Park in Henderson Drivers turning onto US 60 from Tillman Bethel will only be able to turn right. Those wanting to turn left will first need to loop through the new roundabouts to turn back around in the eastbound direction. Residents of the Hillcrest neighborhood will need to enter through Hillcrest Terrace as Morris Drive will remain closed. Project spokesperson Mindy Peterson says this closure allows for a widening and realignment of the highway and a rehabbing of a CSX overpass bridge. 'For drivers who use US 60, just know it's going to look a little different,' explains Peterson. 'So, if US 60 is part of your route there, right at the new interchange, just plan ahead and know you're going to need a little more time.' Peterson says it may be a good idea for drivers to pass through the new interchange prior to the work-week rush. 'See what it feels like so that when you get to Monday morning and you're in the heat of your commute,' says Peterson, 'you know already what to expect.' Peterson says one positive for drivers is that the Adams Lane bridge is expected to re-open to traffic by the end of this week. The bridge had been closed since last December as crews worked to replace the bridge over I-69. The long-term closure along US 60 is expected to last around 45 days. Peterson expects construction on that particular section to wrap up in late June. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. For the latest news, weather, sports, and streaming video, head to Eyewitness News (WEHT/WTVW).
Perth Now
06-05-2025
- Business
- Perth Now
Carney meets Trump in bid to reset Canada-US relations
Canadian Prime Minister Mark Carney is set to meet Donald Trump in the Oval Office on Tuesday in a bid to reset a relationship he says has been undermined by the US president's tariffs and talk of annexation. Carney's Liberal Party won an April 28 election on the back of promises to tackle Trump and create a new bilateral economic and security relationship with the United States. It will be his first in-person meeting as prime minister with Trump. "It's important to get engaged immediately ... and I'm pleased to have the opportunity for quite a comprehensive set of meetings," Carney told a media conference on Friday, adding he expected the talks to be difficult yet constructive. He played down the idea of immediate breakthroughs. "Do not expect white smoke out of that meeting," Carney said, referring to the signal the Vatican sends to indicate a new Pope has been chosen. Carney, a 60-year-old ex-central banker with no previous political experience, was elected Liberal leader in March to replace Justin Trudeau, who had a poor relationship with Trump. Canada is the US's second-largest individual trading partner after Mexico, and the largest export market for US goods. More than $US760 billion ($A1.2 trillion) in goods flowed between the two countries in 2024. While Canada has run a trade surplus of more than $US60 billion in the past two years, most of that stems from its status as the largest foreign supplier of oil to the US. Trump in March imposed a 25 per cent tariff on all steel and aluminium imports coming into the US and then slapped another 25 per cent tariff on cars and parts that did not comply with a North American free trade agreement. On Sunday, Trump said he would put a 100 per cent tariff on all movies produced outside the US, without giving details, in a potential blow to Canada's film industry. US Commerce Secretary Howard Lutnick, in an interview on the Fox Business Network on Monday, said getting a trade deal with Canada was going to be complex. Brian Clow, a senior Trudeau aide who was in charge of US relations inside the prime minister's office for several years, said there was no chance of the tariffs being lifted on Tuesday. "This is going to be the beginning of a process and further engagements that hopefully lead to tariffs being lifted ... that conversation needs to start, and that's why this meeting is so important," he said in a phone interview. In an interview that aired on NBC News on Sunday, Trump called Carney a "very nice man", yet said he would always talk about making Canada the 51st state, repeating earlier comments about the United States not needing any Canadian exports. Carney says Trump's tariffs and talk of annexation are a betrayal of the two nations' traditional long-standing alliance. But he has refrained from insulting Trump and on Friday described him as one of the world's best negotiators.
