D5S+2 -- December 7, 2022

From oilprice:

There's a heck of a lot of "stuff" packed into those two "headlines."

One can argue whether those two "headlines" are factual, accurate, likely to change, unlikely to change, but they certainly fit my "world myth" at the moment. I'm sure Peter Zeihan is watching closely, at least the Russian oil export story.

Two quick comments and then I'll bring up the links to the two articles. I haven't seen the articles yet.

First, I agree 1,000% that the downside to the oil markets is limited. Perhaps it plays out this way:

• short-term: a reset to $75 / $70 (Brent/WTI); and, then,
• mid-term: a return to prices oil bulls like

Second, if accurate that Russia's oil exports nosedive following a price cap,

• one can arguably say that nothing is going well for Mr Putin.

Drones attacking airbases deep inside Russia, southeast of Moscow are just the tip of his problems.

Earlier today Putin brought up the "nuclear card" again -- probably about the same time he was briefed that his crude oil exports were going "south" --  and I'm speaking metaphorically, not geographically or directionally.

Now the links.

Alex Kimani has been quite active the past few days; now again. 

Now, the second link.

Well, well, well. Alex Kimani again. Just after I mentioned that Alex has been quite active the past few days.

Russian crude-oil exports have taken a serious hit since new sanctions and a price cap came into force earlier in the week, with the Wall Street Journal reporting that figures from two data providers on Russian crude both show a big fall, though their magnitudes differ. 

According to one commodity-analytics firm Kpler, Russia’s seaborne exports fell by nearly 500,000 barrels per day on Tuesday, a 16% decline from the November average of 3.08 million bpd. 

Meanwhile, TankerTrackers.com, which tracks sea vessels using signals and satellite images, has reported that Russia's crude exports fell by nearly 50%. With shipments from the Black Sea and Baltic ports accounting for most of the fall.

Some will immediately say this is all temporary -- due to the Turks -- and within a day or two, the Russians and Turks will sort it out. 

So, we'll see. 

But, can you imagine what oil traders are going through right now? Absolute pandemonium, confusion, no clue what's going on. There are so many moving parts. This is probably not a good time to be short oil.

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But Not Ready For Prime Time

I said this at the top (see above):

First, I agree 1,000% that the downside to the oil markets is limited. Perhaps it plays out this way:

• short-term: a reset to $75 / $70 (Brent/WTI); and, then,
• mid-term: a return to prices oil bulls like

If that's accurate:

• US oil companies will do just fine at $75 / $70;
• sure, their profits will take a hit, but they've been through much worse;
• in the big scheme of things, $75 / $70 is pretty good.

But long term, as soon as a year from now, it could be really, really good for US oil companies.

Think of it this way. A year ago, there were three actors on the global stage (in the theater of oil):

• the US
• OPEC
• Russia

Today, there are two:

• the US
• Saudi Arabia

A year from now, there will still be only two:

• the US
• Saudi Arabia
  

And if the global economy "explodes" in a good way -- a year from now --

• coming out of a pandemic;
• coming out of a global recession;
• the demand for oil might be more than just noteworthy.

But between "now" (tonight to be specific) and "then" (December 7, 2023) it could be quite the exploding Ferris wheel ride. But I think I read something on twitter today to the effect that, that is when fortunes are made.