Riyadh and the house of Saud have stated their intentions to reduce oil to the United States. This action is being taken in order to reduce oil inventories in the US. According to Saudi Oil Minister Khalid Al-Falih, the near record stockpiles of oil which have accumulated in the United States are preventing a rise in global oil prices.
Iran has signed an agreement with Russia to trade crude oil for products with US dollars entirely absent from the transaction. The deal, which has been confirmed by the Russian media and Iran governmental authorities, needs to bypass the world’s reserve currency entirely due to the restrictions on trade in US dollars in Iranian banks. The deal has been under discussion since 2014 when Iran was still facing Western sanctions stemming from its nuclear program.
The oil industry differs from many others in that it seems to thrive on speculation and disorganization. The industry has very little desire to collect and utilize data in order to become more efficient. Data collection is instead being left to third parties who are attempting to collect and organize data in a way that it becomes useful to oil traders.
Environmentalists with an interest in preserving the north sea have a proposal for oil companies which at first seems contrary to their stated goals. The proposal is that oil companies and regulators should consider leaving more old oil rigs in the North Sea rather than remove them. The idea is that the removal of these man-made structures is disruptive toward the marine life that has formed around them.
According to Iran’s Supreme Audit Court which monitors the Oil Ministry’s deposits into the state treasury, the Central Bank of Iran has received a payment of $4,105,219,136 from Emirates National Oil Company (ENOC). This was part of ENOC’s settlement with Iran for per-sanction purchases of oil and gas. Last year the Western sanctions which were imposed upon the Islamic Republic over its nuclear program were lifted. Shortly thereafter the country’s Ministry of Petroleum reported the international oil companies had started paying their obligations owed to Iran for purchases of oil made before the sanctions were put in place.
Oil prices fell during Thursday’s market session. The drop coincided with OPEC’s meeting in Vienna, where the announcement was made that production cuts would be extended at current levels for an additional nine months. Market analysts speculate this drop was caused by the market opinion the extension of the cuts at their current level might not have the desired effect of sufficiently reducing global oil stocks.
In a meeting at the OPEC headquarters in Vienna Austria on Thursday, OPEC decided to extend production at their current rate of 1.2 million bpd for an additional 9 months. OPEC will almost certainly be joined in these production cuts by a dozen other non-OPEC oil producing nations. The group of non-OPEC reducing nations is led by Russia, which will continue its production cut that began in December when the previous round of OPEC cuts which began. The non-OPEC share of the production cuts is expected to be around 600,000 bpd.
California is known across the nation not just as the most populous state in the union, or the home of Hollywood, America’s entertainment capital, but also for having very progressive environmental policies. These ambitious policies have set California up to be the most environmentally friendly state in the nation as far as its power consumption goes. Last year, California, Oregon, and Washington all adopted a series of legally binding renewable energy targets, known as the Pacific Coast Action Plan on Climate and Energy (PCAPCE).
Much has been made in the energy markets lately of the intentions of OPEC, whether the extension of the production cuts will have the desired effect upon oil stocks, and the markets reaction. What hasn’t been discussed however, is that if the production cuts were effective one man could decide to restore oil stock to record highs almost instantaneously. That man is of course, the most powerful man in the world.
With the latest extension of OPEC’s production cut set to continue for an additional nine months President Trump believes it is a good time to reopen the discussion on Alaskan drilling. It has long been suspect that the vast 19-million-acre Arctic National Wildlife Refuge (ANWR) contains large untapped reserves of oil. By opening this area for commercial development President Trump proposes attempting to help alleviate two problems simultaneously.
