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Wednesday, March 2, 2022

Did Putin Miscalculate? Weekly EAI Petroleum Report -- March 2, 2022

Did Putin miscalculate? Did the rest of us miscalculate? Some random observations:

  • in the big scheme of things, Russia has only two "things" that generate income: a) oil and natural gas sales; b) military hardware (planes, missiles, technology, and mechanized, armored vehicles); 
    • of the two, oil and natural gas might be more important
  • 2022 will be the year the global economy surges, coming out of Covid-19;
  • pretty much evenly divided among analysts whether supply will keep up with demand;
  • regardless of which school is correct, even if supply keeps up with demand, it will be close;
  • asking if "supply will keep up with demand" is the wrong question; of course, supply will keep up with demand ... at what price? That's the better question.
  • folks, including Putin, felt that Europe was so dependent on Russian oil, that Russia could get away with serious show of military force;
  • the meme a week or so ago was that "no other country" could make up for lack of Russian natural gas or oil;
  • that meme is starting to change: maybe the world can get along without Russian natural gas and/or crude oil; again, it's all about the price;
  • folks were upset that initial sanctions did not include SWIFT and still do not include natural gas and crude oil;
  • SWIFT is now among the sanctions
  • no one thought with natural gas so critical for Europe that the continent would actually shut down the Nord Stream 2 pipeline; not only is the pipeline shut down, but project backers ready to seek bankruptcy protection; 
  • even without formal sanctions, many western countries / companies are saying "no" to Russian oil / natural gas; Russia will find new markets?
  • if Russia was unable to "win" Afghanistan after a decade fighting that war, will Russia be able to "win" Ukraine? And if Russia does win, what will Ukraine look like?
  • although Russia military will eventually come out on top, that doesn't mean, Russia will "control" the population; economy of Ukraine could become a drag on Russia; a Pyrrhic victory of historic proportions?
  • the reason for the huge spike in oil price so quickly? Much of it has to do with type of oil Russia was able to provide. 

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Weekly EIA Petroleum Report

The numbers:

  • US crude oil inventories stand at 413.4 million bbls;
  • US crude oil inventories decreased by a modest 2.6 million bbls from the previous week;
  • US crude oil imports averaged 5.8 million bopd last week, decreasing by 1.1 million bopd from the previous week; over the past four weeks, crude oil imports have averaged 6.2 million bopd, 9.4% more, than the same four-week period last year;
  • US refiners are operating at 87.7% of their operable capacity; almost no change over several months;
  • distillate inventories decreased again; this time decreased by 0.6 million bbls; inventories stand at 16% below the five-year average;
  • jet fuel supplied: increased by 24.5% over same four-week period last year

6 comments:

  1. Vlad Putin has become a legend in his own mind, maybe he always was. Super sized ego and disdain for the West and the loss of the Soviet Union has driven his actions. Living in the past. Will die in the present, unsatisfied and unfulfilled.
    Could go on but will leave it there for now.

    ReplyDelete
  2. This little excursion has also proven that like in the Cold War, Russia has tanks, missiles, nukes, whatever. But their ability to service them, and train committed troops to operate them has once again been found lacking.
    Russia is a paper tiger, but a paper tiger with nukes and a lunatic in charge is still dangerous

    ReplyDelete
  3. Not sure I want to live in that world. Pretty sure the Israelis will do whatever possible to stop that and then....
    Hello Armageddon...

    ReplyDelete
    Replies
    1. Deep down -- the Israeli angle -- is why no one is really worried about Iran. It's not only the Israelis -- no one else in the Mideast wants Iran to have nuclear weapons.

      Delete

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