Well, the laws of oilfield "gravity" are finally kicking back in. They are:
- In spite of small motor-efficiency gains, the demand for oil continues to soar. Those people in China and India who finally got a nice car are not about to park it in the front yard and look at it.
- It has been a long time since the discovery of a major oil field. At some point, maybe soon, demand will significantly outstrip supplies. The scramble will be on.
- Fracking was a diversion. It cannot succeed because the energy gathered through fracking barely exceeds the energy it takes to frack. It's not easy to rearrange underground rock formations.
- The sanctions on Iran may prove a significant boost to their national prospects. Keep it in the ground. By the time sanctions are lifted, the price of oil may have doubled or more. In real economic terms, the price of oil can only go up.
Now IF we had put this problem—one that was already well-defined by 1973—on a WWII footing as Jimmy Carter suggested when when he called the energy problem "the Moral Equivalent Of War," the coming events would be so much easier to manage. Instead, official Washington took to calling his quite reasonable suggestion MEOW. Oh Jimmuh! you were such a pussy. Carter discovered that rational argumentation just wasn't butch enough.
Oil surges to 4-year high as investors see no sign of production rise amid Iran sanctionsRT 25 Sep, 2018
Crude oil prices have jumped to the highest level since November 2014 as key producers like Russia and OPEC are not increasing production, while Iran will soon be hit by US sanctions on its energy industry.
Brent oil surged to $81.9 per barrel on Tuesday, while the US West Texas Intermediate rose to $72.44 per barrel. OPEC, Russia and other key producers met at the weekend to discuss a possible increase in crude output, but the so-called OPEC+ group decided not to do so.
While oil production is not rising, it is likely to fall when the US sanctions against Iran’s oil industry come into force on November 4.
“Iran will lose sizeable export volumes, and given OPEC+ reluctance to raise output, the market is ill-equipped to fill the supply gap,” Harry Tchilinguirian, global head of commodity markets strategy at French bank BNP Paribas, told Reuters.
US President Donald Trump has repeatedly demanded that OPEC, Russia and other producers should increase output to offset the fall in Iranian supplies. The International Energy Agency predicts strong oil demand growth of 1.4 million barrels per day (bpd) this year and 1.5 million bpd in 2019. The growth will come at the time when OPEC’s third largest producer Iran has been losing clients.
“South Korea and Japan have completely stopped importing oil from Iran, and India has slashed it almost twice. It means that that in about a month Iran will lose 1 million bpd. This loss in global supplies can become a catalyst for price growth in the foreseeable future,” Anastasia Ignatenko, leading analyst at TeleTrade said in an e-mail to RT. The analyst noted that oil could surge to $95 per barrel in the second half of 2019. more