THE Crude Oil Price Watch Thread

[radon]

All these sanctions manctions are probably a paper tiger to a great extent. Oil will find a way to where it is needed. They may trade oil through third countries, for a nice little fee. The cornies may soon discover that some tropical island has suddenly become a major oil exporter.

[eXpat]

PSYCHE!

Iran oil ministry denies state media reports on EU oil stop
Parisa Hafezi / Reuters / February 15, 2012

... "We deny this report ... If such a decision is made, it will be announced by Iran's Supreme National Security Council," a spokesman for the ministry told Reuters. ...

Aye, but later they corrected that statement saying that the only courtries they cut exports were France and the Netherlands (and now UK) and the others would be cutted if there are more sanctions.

[Pops]

China will buy the oil that Iran would have sold the EU and the EU will buy the oil that China would have bought from, say, KSA.

Unless of course China wants that oil too.

That is the problem hidden in all the "production is booming" headlines. There is physically less oil being sold on the "market" because it is tied up in bi-lateral agreements.




China and others have been very forward thinking about buying future production directly from producing countries. They've invested in actual production infrastructure, they are the oil company that is doing the extraction or they are the bank for nationalized countries.

The US meanwhile paves the way with blood and debt for "our" Oil Cos who have no allegiance to anyone except the highest bidder - as long as it isn't too uncomfortable...

From among the most outspoken of critics of the 2003 U.S.-led invasion to topple Saddam Hussein, China has emerged as one of the biggest economic beneficiaries of the war, snagging five lucrative deals. While Western firms were largely subdued in their interest in Iraq's recent oil auctions, China snapped up three contracts, shrugging off the security risks and the country's political instability for the promise of oil.
The quest for crude has left a heavy Chinese footprint in a number of countries where others have shied away, whether because of violence, human rights violations or sanctions.

http://www.msnbc.msn.com/id/37577656/ns ... 0EZInJWolY

[Roryrules]

I don't know, but now I'm speculating, that if France is getting a 3% cut (which they apparently are) it means they will look for that 3% from somewhere else so the UK will have to do the same which means each country will bid higher and therefore it could, in theory, take prices up beyond 5% - which could crash the UK economy couldn't it?

No, it won't affect the UK economy at all. We're talking about some truly tiny amounts here, it's insignificant on a macroeconomic scale.

[Plantagenet]

it won't affect the UK economy at all. We're talking about some truly tiny amounts here, it's insignificant on a macroeconomic scale.

Thats not what economists who specialize in macroeconomics say.

"a persistent 10% increase in the price of oil –.... -- would reduce the US and the G7 growth rate by about 0.3%-0.4% within a year."
----Nouriel Roubini and Brad Seltzer (2004)

We've already seen at least a 10% increase in oil prices....now as the crisis ratchets up we are likely looking at a 20% increase or more, putting a significant drag on US/EU economies that are already shaky and weak.

[Mesuge]

Iranians "peddaling it softly.."
as they still have not included Greece on that list.
As Rickards said 1. currency wars then 2. trade wars then 3. shooting wars..
We are somewhere around "2"

[dolanbaker]

it won't affect the UK economy at all. We're talking about some truly tiny amounts here, it's insignificant on a macroeconomic scale.

Thats not what economists who specialize in macroeconomics say.

"a persistent 10% increase in the price of oil –.... -- would reduce the US and the G7 growth rate by about 0.3%-0.4% within a year."
----Nouriel Roubini and Brad Seltzer (2004)

We've already seen at least a 10% increase in oil prices....now as the crisis ratchets up we are likely looking at a 20% increase or more, putting a significant drag on US/EU economies that are already shaky and weak.

The cutting off of supplies (1%) won't affect the UK market, the "rationing by price" will be more than enough!

UK oil consumption is already declining, so as I said earlier the halting of Iranian oil will not be noticed.

[dolanbaker]

Iranians "peddaling it softly.."
as they still have not included Greece on that list.
As Rickards said 1. currency wars then 2. trade wars then 3. shooting wars..
We are somewhere around "2"

They're probably just switching over the contracts to Chinese importers one at a time to ensure they minimise disruption to their production system.

[Mesuge]

Probably, but in terms of damage done, more delays equals less effect.
Also the best bang is based more on the following depreciating order:
Greece > Italy > France.
And they started with France, rather telling..

[Roryrules]

it won't affect the UK economy at all. We're talking about some truly tiny amounts here, it's insignificant on a macroeconomic scale.

Thats not what economists who specialize in macroeconomics say.

"a persistent 10% increase in the price of oil –.... -- would reduce the US and the G7 growth rate by about 0.3%-0.4% within a year."
----Nouriel Roubini and Brad Seltzer (2004)

We've already seen at least a 10% increase in oil prices....now as the crisis ratchets up we are likely looking at a 20% increase or more, putting a significant drag on US/EU economies that are already shaky and weak.

Firstly, the amounts here are so tiny that I highly doubt it'll lead to a significant increase in oil prices, certain not in the region of 10% or more.

Secondly, the UK's oil consumption has been declining for years even when real GDP was rising, the economy is far less sensitive to changes in the price of crude than it was a decade ago.

As far as impacts go, this one won't even register. A few flurries of snow would have a far greater effect on British GDP than this.

[Plantagenet]

I highly doubt it'll lead to a significant increase in oil prices...

You'd better hope not.

Gas prices are already at record high levels in the EU---one reason much of the EU is already in recession.

Gas prices in EU already at record levels

[Roryrules]

You'd better hope not.

Gas prices are already at record high levels in the EU---one reason much of the EU is already in recession.

Gas prices in EU already at record levels

The UK is not in recession and its petrol prices are at record highs due to ever-increasing taxation.

The Eurozone's recession has been caused by the ECB's ridiculously tight monetary policy and Germany's insatiable appetite for continental austerity rather than addressing the yawning chasm in competitiveness between the north and south.

[Plantagenet]

Gas prices in EU already at record levels

... petrol prices are at record highs due to ever-increasing taxation.

Gas taxes are high in the EU, but they are not the reason for record high gas prices. The price of petrol across the EU has doubled over the last three years, while taxation rates on petrol in the EU have changed little.

Similarly, the price of gas in the US has doubled over the last three years as well while gas taxes are unchanged.

If taxes are stable but the price goes up, then taxes aren't to blame for the price increases. The price driver for increases in gas prices is the increasing cost of a barrel of oil.

[Mesuge]

There is a large food chain before the pump price even visible to us.
Many individual parts of this chain have been eating the cost (smaller margins) to stay afloat or not to be taken over by competition for quite some time. So unless the source producers are willing to live again bellow $100, which they can't with employing hush .gov money on silencing domestic problems, the only predictable result will be much higher price spikes at the pump and at some point the system will collapse from its inner parts colliding one over the another.

This Persian plot is just yet another rather small wrench drop into the clockwork, could be the final or the second last one or not that much significant in the scale of forthcomming events at all.

[Newfie]

My take on this is that oil is a pretty fungible asset. As long as the total production remains the same the price will be 'relatively' unaffected.

If Iran does not sell to to Britain and/or France then they must sell somewhere else displacing someone, who WILL sell to Britain and/or France.

The psychological impact may be far greater. But I kinda doubt it will be huge. I think the markets have this eventuality 'priced in.'

[bratticus]

In the meantime guess where those 500K bpd that were going to the EU, are going now?

So you really think the 452K bpd on the chart is this same 500K bpd? Like China's oil imports would not be going up otherwise?

At this point nothing is sure really, however, seems that the Chinese can compensate for the loss of the EU market.
The article suggest that this could well be the case, we will have to wait and see.

Looks like you were right.

Iran stops oil sales to British and French firms
Reuters / Sunday February 19, 2012

"Exporting crude to British and French companies has been stopped ... we will sell our oil to new customers," spokesman Alireza Nikzad was quoted as saying by the Ministry of Petroleum website.

New customers with straight black hair and almond eyes.

[Anvil]

This counter embargo by Iran on the USA main Fascist allies in euro land Britain and France will just make the oil price less elastic and more prone to price shocks.

Not good for the supposed green shoots MSM have been spewing on about like a broken records.

[Roryrules]

This counter embargo by Iran on the USA main Fascist allies in euro land Britain and France will just make the oil price less elastic and more prone to price shocks.

Neither Britain, nor France are 'fascist' unless you've decided to invent a completely new meaning to the term... Oh, and the UK retains its own currency, so it's not in euro land. So that's at least two things you've got wrong in a single sentence. I'm impressed.

[bratticus]

The part that's scaring me the most about this is the amount of obvious, blatant lying that I see.

I just filled up with 87 Octane (10% ethanol) for $3.69/gallon but the sign says $3.59. Ten cent difference? I could see if it was just a few cents off.

Meanwhile

Iran stops oil sales to British and French firms
Reuters / Sunday February 19, 2012

Brent crude oil prices were up $1 a barrel to $118.35 shortly after Iran's state media announced last week that Tehran had cut oil exports to six European states.

Sure they word it as "shortly after ... last week" but how could they not know Brent closed Friday February 17, 2012 at $121.35 and why wouldn't they include the more timely price?

Meanwhile

The most important economic data in Asia next week
MENAFN - ecPulse / Feb 19, 2012

... Starting with the HSBC PMI from China, the preliminary reading for February might show some improvement from January’s reported contraction as the index remained below 50 at 48.8.

China recently is experiencing some difficulties, where the nation’s exports retreated for the first time in more than two years in January, as it retreated by 0.5% compared with the prior recorded increased reading of 13.4%, along with the return of consumer prices to advance again, where it advance by 4.5 %, which is threatening the nation’s growth rates.

These desperate signs forced more monetary easing, where it asked banks to reduce cash reserves and urged them to raise the level of lending in the first quarter of this year. ...

I can't help wondering what will Tuesday February 28, 2012 look like?

[FarQ3]

Nymex futures up over $105US/bbl and Brent up over $122US/bbl as I send this. So this news is having an inflationary effect on the already steadily rising oil prices oil prices. On recent movements WTI could be over $110 early next week.