Crude oil stuck in the $80s, Europe's LNG woes & more

We're four months from the end of crude trading year 2023 and oil prices appear to be stuck at $80+ per barrel levels. And for all the market chatter of $100 per barrel oil prices, a July and early August rally, tightness in the physical market and all else in between - there seems to be no convincing bullish or bearish pattern either way. So here are one's musings on the direction of travel and what hedge funds are up to via Forbes. 

The global crude market for all intents and purposes remains challenging. Tight physical supply in the wake of Saudi and Russian cuts, unexpected industry outages and summer demand can only do so much to support higher prices when the wider economic climate remains dicey in a high interest setting. Simply put, as long as global central banks remain hawkish, the crude market is unlikely to fire up to levels (shall we say three figures) the perma-bulls hope for. 

Away from crude prices, here are some thoughts on the Europe's LNG woes, the jet fuel market and the rapidly dwindling 'war windfall' of oil and gas majors. Away from musings on Forbes, the Oilholic is busy getting back on the speaking circuit, resuming dialogues with energy industry movers and shakers for market insights, offering analysis on international broadcasts, and more. All in all - it's been a hectic four weeks. But fear not, blogging here will also pick up pace shortly. Just getting a few things on track for the exciting road ahead. That's all for now folks! More soon! Keep reading, keep it 'crude'!

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© Gaurav Sharma 2023. Photo © Image by Terry McGraw from Pixabay. 

On Guyana & other 'crude' musings

As the month of July comes to a close, it seems the Saudis have indeed achieved near-term success with global oil benchmarks - Brent and WTI - now above $80 per barrel. It's a price level that Riyadh can live with. Although it is worth wondering at what cost (i.e. the good old debate about losing market share vs propping up the market without the help of friends / foes)? 

On a related note, while for much of OPEC+ the recent uptick in crude prices may come as a relief, for one new non-OPEC kid on the crude exploration block it has the makings of a spectacular boost in fortunes - Guyana. Here are the Oilholic's thoughts via Forbes on this micro-state in Latin America, with a population of less than a million people, and its full-blown oil boom. 

Guyana's headline crude production which came in at less than 100,000 barrels per day (bpd) as recently as 2020 has grown nearly four-fold to just shy of 383,000 bpd in 2023, and is still growing, according to the country's Ministry of Natural Resources. That said all the market chatter of it either joining or being asked to join OPEC is a load of nonsense that been denied by the oil producers' organization itself.

Elsewhere in the Oilholic's world, yours truly offered his perspective market perspectives on CGTN and Asharq Business News following the conclusion of the OPEC International Seminar earlier this month, and noted OMV's potential recoverable natural gas find of approximately 48 TWh, or 28 million barrels of oil equivalent. This discovery carries the potential to alter the natural gas market in Central Europe, and is Austria's largest gas discovery in the last 40 years. So watch this space! That's all for the moment folks! Keep reading, keep it 'crude'!

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© Gaurav Sharma 2023. Photo © Image by Omni Matryx from Pixabay. 

On crude demand & the OPEC seminar’s conclusion

On a calmer second and concluding day of the OPEC Seminar, participants and deliberators' thoughts moved away from obsessing about the oil price and market stability, to pragmatic discussions on a more just and equitable energy transition. And, of course, to the energy sustainability trilemma (sustainability, security and affordability) - i.e., how focusing on one aspect at the cost of the other could have - in the words of many participants - "disastrous" consequences.

Of course, many spokespersons representing developing world producers at the gathering felt they need no lectures from the developed nations; and had every right to tap into the wealth of their hydrocarbons to improve their economic fortunes. No doubt an emotive subject for many, especially since no one can convincingly call time on hydrocarbons anytime soon.

The way the Oilholic views it – human mobility, mainly ground transportation, is unquestionably and increasingly heading in the direction of electric mobility. However, there are no obvious solutions or substitutes for petrochemicals, for aviation, for heavy mining and industry, for the cosmetics value chain, and many other facets of the global economy. So renewable energy, and electric mobility are the low hanging fruits, but what and where next, and how fast? 

BP’s Boss Bernard Looney told the seminar: “Oil and natural gas will continue be a part of the world’s energy mix for several decades to come.” How then do you balance investments in hydrocarbons versus the capex involved in moving away from them, at what pace, and using what proportionalities?

For instance, as the United Arab Emirates' Energy Minister Suhail Al Mazrouei pointed out – current
global oil demand is north of 100 million barrels per day (bpd), and every year the energy industry needs to invest to prevent the depletion of around 8 million bpd.

OPEC puts the figure at $12.1 trillion to 2045 or $500 billion per year. Projection figures can vary from forecaster to forecaster. It's not the amount of money that’s the subject of the most heated debates both in Vienna and beyond, it’s what approach to take over the coming decades. For that there is neither a unified approach nor any sort of magic wand solution. And so the debate rages on, as it did at the OPEC Seminar, and as COP28 approaches with United Arab Emirates, a major hydrocarbon producer being the host nation (as were coincidentally the last two – Egypt and Scotland). So plenty to ponder over. 

And on that note, it’s time to bid goodbye to Vienna. Just before one takes your leave, here’s the Oilholic’s latest Forbes missive on how/why Saudi Arabia remains committed to unilateral cuts, and why the oil price isn’t quite firing up. More analysis to follow over the airwaves in the coming days on what was discussed here, but that’s all for now. Keep reading, keep it crude! 

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© Gaurav Sharma 2023. Photo © Gaurav Sharma, July 7, 2023.

All about crude "market stability"

The Oilholic arrived at the first day of the OPEC International Seminar to find the oil producers' group in a belligerent mood led by kingmaker Saudi Arabia. The kingdom's energy minister Prince Abdulaziz bin Salman said recent OPEC+ actions demonstrate the strength of the partnership and teamwork with Russia. 

Furthermore, he uttered two words that shaped the entire day - "market stability". Addressing delegates, Abdulaziz said his country will do whatever it takes to ensure it, and looks like Riyadh is not ditching its stance of unilateral voluntary oil production cut of 1 million barrels per day (bpd) in a huff. Though Abdulaziz did go to some length to say the Kingdom's current stance does imply it was returning to its 1980s swing producer status.

His address followed that of several of his OPEC ministerial peers repeatedly mentioning the need for "market stability" - cue a higher crude price, perhaps one that's above $81 per barrel the Saudis need to balance their budget. UAE Energy Minister Suhail Al Mazrouei chimed in by adding that if anything OPEC deserves an even larger market share in a "balanced" energy market, and added that market commentary on the group's intentions had been a tad er....unbalanced. 

And not to be outdone, Azerbaijan's Minister of Energy Parviz Shahbazov quipped that if OPEC+ or OPEC didn't hypothetically exist as groups, "we would need to create them" across the energy value chain, and not just oil, in the interests of well, you guessed it - "market stability". 

But one of the main reasons a higher oil price that OPEC+ craves is proving elusive is down to the 6 million bpd of Russian oil that is still finding its way to the market despite a near absence of Western buyers, and India and China duly obliging by importing copious amounts it. 

Canada, Guyana, US, Brazil and Norway are all also pumping more. But the biggest weight on the crude price is the uncertain economic climate and the hawkish stance of global central banks, especially the US Federal Reserve. More to follow from Vienna, but that's all for the moment folks! Keep reading, keep it crude! 

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To email: journalist_gsharma@yahoo.co.uk

© Gaurav Sharma 2023. Photo © Gaurav Sharma, July 5, 2023.

Back on a road (err...flight path) well travelled!

It's nearly time for BA706 - a very familiar British Airways flight number as far as the Oilholic's travels go. For after a gap of over three years in earnest, the Oilholic is back on a 'crude' road (err...flight path) well travelled and heading to the 8th International OPEC Seminar in Vienna, Austria. The core subject for deliberations is "Towards a sustainable & inclusive energy transition" and yours truly is looking forward to a fascinating few days of international dialogues. 

One must say, waiting for a flight to the Austrian capital once again for an OPEC gathering after gap years spent in the "in-house" corporate world brings a renewed sense of excitement and anticipation, eagerness to reconnect with old friends in energy analysis community and make new friends. 

Prevalent energy market conditions are miles apart from where we were in a pre-Covid world in March 2020 (scene of the last crime....err...visit). And who can forget the negative WTI oil price that followed in April 2020. Furthermore, energy transition is high on the agenda in a changed (hopefully pragmatic) world. So cheers to it all. 

To warm up, and prior to embarking on this journey, yours truly has fired a few missives via Forbes. Based on the Oilholic's reading of the current market situation and macroeconomic climate, oil prices remain rangebound and stuck in $70s for Brent (More here). 

And here are yours truly's thoughts on Shell's dividend hike and return to 'crude' basics. If sustainable investment trusts, learning more about Scope 1, 2 & 3 emissions and OPEC's June meeting are topics of interest, you can find your way there via the Oilholic's Forbes profile (details below). But that's all for now, and for the moment folks. Am BACK! So keep reading, keep it 'crude'!

To follow The Oilholic on Twitter click here. 

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To email: journalist_gsharma@yahoo.co.uk

© Gaurav Sharma 2023. Photo © Gaurav Sharma, July 4, 2023.