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  • OIL - ENERGY MARKETS

OIL - ENERGY MARKETS

THE OIL WAR CONTINUES WHILE EGYPT & LIBYA FACE OFF ON DRILLING

3/29/2020

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Turkey plans new drilling for oil and natural gas in disputed waters, in a major assertion of its claims over resources that could fuel tensions with neighbors. Drilling will take place in the eastern Mediterranean and Black Sea from July, while seismic exploration will be stepped up within maritime borders set by an accord with Libya’s internationally recognized government, the Turkish energy minister said. – Bloomberg ​
Ellen R. Wald writes: If Saudi Arabia is able to demonstrate that it could sell all of its supply, then that could signal that, at least on one level, its gamble is working. […]If, on the other hand, Saudi Arabia can’t find buyers, the market will have little confidence in the kingdom’s ability to impact prices or its power over the oil market. Global oil prices will fall and Saudi Arabia will face an identity crisis. – Bloomberg ​
Karen Young writes: The economies of the GCC states will experience major changes from the twin COVID-19 and oil crises, as will the global economy. The societies of the GCC states, however, may be the most changed in terms of their demographic composition and reliance on foreign labor. This could be a moment for recalibration of reliance on foreign workers. It could also be a moment in which standards of living are drastically downshifted as a vibrant consumer base is weakened by expatriate exits. – Al-Monitor ​
Oil-market central planning: Not just for socialists anymore
Benjamin Zycher | NationalReview.com
After the (eventual) great restart, a new economic normal
James Pethokoukis | AEIdeas
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Egypt and Turkey's energy face-off in the Mediterranean
Egypt signing an agreement with five major energy companies to start drilling in the Mediterranean off its coast near Libya raises the prospect of more friction developing with Turkey.
Turkey appears to want more than Syria’s oil
 Like Moscow and Washington, Ankara seems to be coveting the oilfields of Deir ez-Zor in Syrian Kurdistan, which Kurds fear would give Turkey an opening to take over the entire Rojava area.
​Saudis risk losing last Republican defenders with oil price war
 The oil price war places the Saudis at risk of losing their previously stalwart defenders on Capitol Hill, the last line of defense against legislation targeting the kingdom.
Turkey appears to want more than Syria’s oil
 Like Moscow and Washington, Ankara seems to be coveting the oilfields of Deir ez-Zor in Syrian Kurdistan, which Kurds fear would give Turkey an opening to take over the entire Rojava area.
Dr. Vish Sakthivel writes: The pandemic has brought profound and indefinite uncertainty to societies the world over, and whether the opening provided by the health crisis will have lasting effects on Hirak’s modes of action is yet to be seen. […]However, that the majority is calling for a different tack and ready to use the crisis — and the public outrage that will likely ensue — as a political opportunity reveals a dynamic and adaptable movement that will continue to be a fixture in Algerian politics. – Middle East Institute ​
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5 DOLLAR BARREL OIL IS HERE:  RUSSIA TAKES ON U.S. FRACKERS

3/9/2020

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Liam Denning writes: America’s economic identity as primarily a services-led, energy consumer rather than an exporter in the OPEC mold carries a more insidious threat to the well-being of petro-states. Three years on from its first public airing, the Trump administration’s “energy dominance” mantra has aged like a fine wine-cooler. […]Which is why Saudi Arabia and Russia would love America to keep doing just that. A U.S. government explicitly supporting oil prices is less likely to throw its weight behind alternative forms of energy supply (and demand). – Bloomberg  ​
Oil in the Time of Corona
Mark Mills, City Journal
https://thehill.com/opinion/energy-environment/486975-its-not-armageddon-for-americas-oil-and-gas-industry
ARAMCO PROFITS DOWN
​OIL PRICE WAR IS ON
China’s rise may not be inevitable
In recent weeks, Russia has absorbed two major setbacks: a falling out with Turkey over Syria and the onset of an oil price war with Saudi Arabia. In a Bloomberg op-ed, Hal Brands notes that recent events remind us that President Vladimir Putin's foreign policy is transactional, shortsighted, and often counterproductive, similar to that of President Trump’s statecraft. Mortgaging the future for short-term gains isn’t a winning strategy, but it’s an approach that Putin and Trump seem to have in common. Continue here.
Russia's Shift from "Greater Europe" to "Greater Asia"
By Emil Avdaliani, March 15, 2020
EXECUTIVE SUMMARY: Though analysts tend to portray Russia’s foreign policy as truly global (that is, independent of Europe, the US, and China), the country is plainly tilting toward Asia. The Russian political elite does its best to hide this development, but the country is accumulating more interests and freedom to act in Asia than in Europe or anywhere else.
Continue to full article ->
Price Wars and Pandemic: How Coronavirus and a Russia-Saudi Dispute are Affecting Oil Supply with Gregory Brew
  • Oilmaggeddon is still bad news for Asia
  • Stocks, oil fall as Trump’s Europe ban fans fear
Fed throws $1 trillion into money markets as financial volcano erupts
On Monday, the global oil price cratered. The impetus was the collapse in talks between Russia and the Organization of the Petroleum Exporting Countries (OPEC) on further cuts to production. But, writes Christian le Miere, the systemic causes of the oil-price collapse are beyond government control.
CNBC
The Drop In Oil Prices: Good Or Bad?
by David R. Henderson via Defining Ideas
OPEC, the United States, and the rules 
Russia: Oil to Remain Competitive Despite Price Drop.  Russia’s energy ministry announced on Monday that the oil sector will keep its share of the market and remain competitive despite price projections.  Energy Minister Alexander Novak stated, “The Russian oil industry has a high-quality resource base and a sufficient margin of financial strength to remain competitive at any forecast price level, as well as maintain its market share.”  Reuters  U.S. News & World Report

Russia: Ruble Falls 7%.  The Ruble reached a four-year low on Monday following a breakup of talks between Saudi Arabia and Russia over proposed cuts in oil production.  In response, Russia’s central bank announced it will be suspending foreign-currency purchases for 30 days to “increase the predictability of actions of monetary authorities under the conditions of significant changes on global oil markets.”  The collapse in oil price could cause a deficit for the economy this year and the ruble drop could cause inflation. Bloomberg RFE/RL
OIL PRICE
Oil to hit $20 amid Saudi-Russian price warThe breakdown of the OPEC+ alliance and the ensuing Saudi flooding of the markets could drive oil down to $20 a barrel this summer. “$20 oil in 2020 is coming. Huge geopolitical implications,” tweeted Ali Khedery, who previously served as ExxonMobil’s senior advisor for the Middle East. Read More
RUSSIA TAKES ON US SHALE
It was a “Black Monday” for Russia as the country woke to find the ruble down to four-year lows following a 25% crash in global oil prices – their biggest fall in the century. The downward spiral in oil prices is the direct result of Russia failing to reach an agreement with OPEC, the organization of top oil exporters informally led by Saudi Arabia, with which Moscow has been cooperating in the OPEC+ framework. Read More
Oil price collapse beyond any government’s controlOn Monday, equity, energy, bond and currency markets all were launched into turmoil as the global oil price collapsed. Hit by both a demand and a supply shock, oil has fallen nearly 50% this year. Although oil producers are likely to be hit hard by this latest development, the longer-term effects of the price collapse are not all bad. Read More
​Mideast oil producers brace for impact of price slide
 The global coronavirus outbreak and falling oil prices could spell a massive economic slowdown for oil-producing countries in the Middle East.
Does Moscow’s withdrawal from OPEC-plus deal end Russia-Saudi honeymoon?
 Russia’s decision to break off from the Saudis in the OPEC-plus agreement has some merits.
The United States is still too reliant on oil
In a Washington Post op-ed, Karen Young examines the severe economic effects on both sides of the Persian Gulf and countries in the region that rely on the Gulf Arab states for financial support. Despite some growth in the region, the Saudi oil supply shock combined with a global pandemic threatens this hard-won growth.  Read more here.

2020 is shaping up to be Iraq’s most difficult year since 2003, when the US launched its shock-and-awe campaign to bring down longtime dictator Saddam Hussein. Michael Rubin took to the National Interest to argue that last week’s plunge in oil prices completes Iraq’s perfect storm. The Iraqi government has suffered three strikes: a constitutional crisis, coronavirus, and now a plunge in oil prices. Iraqis are resilient, but they will now pay the price for their leaders’ populism. It is time for the US to reengage diplomatically and economically to help Iraq reform its political and economic system toward the stability and prosperity the new generation of Iraqis deserve. Read here.
Following the US killing of Islamic Revolutionary Guard Corps commander, Qassem Soleimani, most attention focused on the Iranian response. After the attack on US troops in Iraq, Iran stated that it had achieved the “great revenge” it desired. Yet, few observers believe that Tehran is finished with its revenge. In a Foreign Policy op-ed, Ryan Berg and Colin Clarke argue that in the wake of the Soleimani killing, Iran would consider an attack on Latin America as a means of sending an undeniable signal to the US of its continued capability to escalate with a strike in America’s backyard. Read here.

What’s to blame for the sudden drop in oil prices? Saudi Arabia? Coronavirus? Too much supply? In a new "In 60 Seconds" video, Karen Young explains that low global growth coupled with a disruption in Chinese economic activity and a failed OPEC+ strategy has left us with too much oil in the market. As the Saudis sell the oil at a discount with few buyers, the result is an oil dump. The good news is we have plenty of oil. The bad news is we need the global economy, especially the Chinese economy, to pick up demand. Watch the video here.
Jane Nakano writes: The nuclear industry of advanced industrialized countries is under significant pressure to remain competitive as the market landscape for new nuclear power opportunities changes. […]This report illuminates how the changing market competition among the United States, Russia, and China will affect their future relations with nuclear commerce recipient countries, and discusses why Russia and China promote nuclear commerce, as well as which factors may alter their market competitiveness. – Center for Strategic and International Studies ​
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