Flotilla of Saudi Oil Threatens to Worsen U.S. Supply Glut

[Tom Kirkman + 8,860]

This is not accidental.  This is bad news.

Saudi Arabia is apparently seeking an economic battle with the world and specifically against the U.S.

The time era of the one trick oil pony of Saudi Arabia and many OPEC countries is likely coming to an end.

Copy & pasted in full due to WSJ paywall.

Flotilla of Saudi Oil Threatens to Worsen U.S. Supply Glut

Tankers carrying roughly seven times the normal monthly amount of Saudi crude are coming to America

A fleet of tankers full of Saudi oil is slowly making its way to the U.S. Gulf Coast, threatening to worsen an already historic oversupply of crude.

The Saudi crude, about seven times as much as the Gulf Coast took from the country in a typical month last year, will fill rapidly dwindling places to store oil, depress already low prices in key shale regions and increase pressure on drillers from Texas to North Dakota to shut off their wells.

"We're going to have some very severe short-term pain," said Mark Papa, the ex-chairman of Centennial Resource Development Inc. and former chief executive of EOG Resources Inc.

These tankers were loaded in March and early April when Saudi Arabia was pursuing a strategy of increasing its output to drive down prices and increase its share of key markets. Since then, the U.S. brokered a deal with nearly two dozen countries, including Saudi Arabia, for a historic cut to world-wide oil production. The aim is to raise prices and stabilize oil markets.

Nonetheless, the 20 tankers holding a combined 40 million barrels of crude are still headed to ports in Louisiana and Texas, according to shipping sources and market intelligence firms Vortexa Ltd. and Kpler Inc. They are due to arrive in Texas and Louisiana through late May.

"This is the American energy producers' Pearl Harbor. We know the ships are coming in, and yet nobody is doing anything about it," said Kirk Edwards, president of West Texas oil company Latigo Petroleum LLC. "Every barrel they're bringing in on those ships backs out a barrel of oil produced here in the Permian Basin."

The slowly unfolding situation has begun to capture the attention of U.S. politicians, some of whom are calling for the U.S. to consider embargoes or other measures to stop the influx of oil. Sen. Kevin Cramer of North Dakota has expressed frustration that Saudi Arabia would flood the U.S. market with discounted crude at this moment.

"Don't let them unload on American soil," the Republican lawmaker tweeted last week. He later exhorted President Trump to do all he could to convince Saudi Arabia to route its oil elsewhere.

President Trump is monitoring the situation and has said all options are available in stabilizing energy markets, a senior administration official said.

One possibility for the president would be to impose tariffs, but observers said that is unlikely following the recent oil deal. Francis Fannon, the U.S. State Department's most senior energy official, said tariffs remain an option for the president, but "he consistently said it was a lever he didn't think he would need to pull."

The state-run Saudi Arabian Oil Co., known as Saudi Aramco, declined to comment.

The American Petroleum Institute, a powerful industry trade group, opposed any interference in free trade for oil. "That's actually the last thing we need," said Frank Macchiarola, the group's senior vice president of policy, economics and regulatory affairs. "Reliance on foreign or imported crude is important for refineries."

A substantial majority, if not all, of the crude coming from Saudi Arabia had buyers, market sources said.

The industry is already facing a massive oversupply of crude, driven by a historic drop in demand as billions of people stay home to counter the spread of the coronavirus.

U.S. crude inventories rose by 19.2 million barrels last week, according to the Energy Department, and the benchmark U.S. oil price Thursday was at $19.87 a barrel, the lowest in 18 years. At trading hubs in the Gulf Coast, Permian Basin in West Texas and the Bakken Shale of North Dakota, crude traded for significantly lower. In the Bakken, prices fell below $10 a barrel as sellers outnumbered buyers.

Some companies have begun shutting in wells whose oil has nowhere to go. Cimarex Energy Co. Chief Executive Thomas Jorden said pipeline companies already have asked the Denver-based driller to make voluntary output curtailments amid storage constraints, even offering breaks on transportation fees.

"We would rather shut in some of that production than continue to produce at these prices," Mr. Jorden said.

The Saudi oil surge is set to exacerbate that glut, starting with the supertankers Awtad, Jana, Aslaf and Lulu, carrying 2 million barrels apiece, which are on track to arrive this month, according to vessel-tracking data.

Most of the tankers are set to arrive in May, bringing almost 32 million barrels to Texas and Louisiana ports, though some may still change their destination. It would be the largest month for Gulf Coast imports of Saudi crude in more than six years, according to Vortexa's forecast and Energy Department import data.

However, this might be the last surge of Saudi crude to head to the U.S. Gulf Coast for a while. Following a 23-nation agreement to cut crude production, Saudi Arabia on Monday raised the price of oil it sells to U.S. refiners, making it less attractive to buy, while it cut prices to Asia.

 

[BLA + 1,666]

On 4/17/2020 at 1:27 PM, Tom Kirkman said:

 

Tankers carrying roughly seven times the normal monthly amount of Saudi crude are coming to America

A fleet of tankers full of Saudi oil is slowly making its way to the U.S. Gulf Coast, threatening to worsen an already historic oversupply of crude.

Nonetheless, the 20 tankers holding a combined 40 million barrels of crude are still headed to ports in Louisiana and Texas

A substantial majority, if not all, of the crude coming from Saudi Arabia had buyers, market sources said.

The industry is already facing a massive oversupply of crude .  .  .  .  .

The Saudi oil surge is set to exacerbate that glut, starting with the supertankers Awtad, Jana, Aslaf and Lulu, carrying 2 million barrels apiece, which are on track to arrive this month, according to vessel-tracking data.

Most of the tankers are set to arrive in May, bringing almost 32 million barrels to Texas and Louisiana ports, though some may still change their destination. It would be the largest month for Gulf Coast imports of Saudi crude in more than six years, according to Vortexa's forecast and Energy Department import data.

However, this might be the last surge of Saudi crude to head to the U.S. Gulf Coast for a while. Following a 23-nation agreement to cut crude production, Saudi Arabia on Monday raised the price of oil it sells to U.S. refiners, making it less attractive to buy, while it cut prices to Asia.

 

If it's heavy oil in those tankers it does not hurt the shale producers. 

Edited April 19, 2020 by BLA

[ceo_energemsier + 1,818]

38 minutes ago, Tom Kirkman said:

This is not accidental.  This is bad news.

Saudi Arabia is apparently seeking an economic battle with the world and specifically against the U.S.

The time era of the one trick oil pony of Saudi Arabia and many OPEC countries is likely coming to an end.

Copy & pasted in full due to WSJ paywall.

Flotilla of Saudi Oil Threatens to Worsen U.S. Supply Glut

Tankers carrying roughly seven times the normal monthly amount of Saudi crude are coming to America

A fleet of tankers full of Saudi oil is slowly making its way to the U.S. Gulf Coast, threatening to worsen an already historic oversupply of crude.

The Saudi crude, about seven times as much as the Gulf Coast took from the country in a typical month last year, will fill rapidly dwindling places to store oil, depress already low prices in key shale regions and increase pressure on drillers from Texas to North Dakota to shut off their wells.

"We're going to have some very severe short-term pain," said Mark Papa, the ex-chairman of Centennial Resource Development Inc. and former chief executive of EOG Resources Inc.

These tankers were loaded in March and early April when Saudi Arabia was pursuing a strategy of increasing its output to drive down prices and increase its share of key markets. Since then, the U.S. brokered a deal with nearly two dozen countries, including Saudi Arabia, for a historic cut to world-wide oil production. The aim is to raise prices and stabilize oil markets.

Nonetheless, the 20 tankers holding a combined 40 million barrels of crude are still headed to ports in Louisiana and Texas, according to shipping sources and market intelligence firms Vortexa Ltd. and Kpler Inc. They are due to arrive in Texas and Louisiana through late May.

"This is the American energy producers' Pearl Harbor. We know the ships are coming in, and yet nobody is doing anything about it," said Kirk Edwards, president of West Texas oil company Latigo Petroleum LLC. "Every barrel they're bringing in on those ships backs out a barrel of oil produced here in the Permian Basin."

The slowly unfolding situation has begun to capture the attention of U.S. politicians, some of whom are calling for the U.S. to consider embargoes or other measures to stop the influx of oil. Sen. Kevin Cramer of North Dakota has expressed frustration that Saudi Arabia would flood the U.S. market with discounted crude at this moment.

"Don't let them unload on American soil," the Republican lawmaker tweeted last week. He later exhorted President Trump to do all he could to convince Saudi Arabia to route its oil elsewhere.

President Trump is monitoring the situation and has said all options are available in stabilizing energy markets, a senior administration official said.

One possibility for the president would be to impose tariffs, but observers said that is unlikely following the recent oil deal. Francis Fannon, the U.S. State Department's most senior energy official, said tariffs remain an option for the president, but "he consistently said it was a lever he didn't think he would need to pull."

The state-run Saudi Arabian Oil Co., known as Saudi Aramco, declined to comment.

The American Petroleum Institute, a powerful industry trade group, opposed any interference in free trade for oil. "That's actually the last thing we need," said Frank Macchiarola, the group's senior vice president of policy, economics and regulatory affairs. "Reliance on foreign or imported crude is important for refineries."

A substantial majority, if not all, of the crude coming from Saudi Arabia had buyers, market sources said.

The industry is already facing a massive oversupply of crude, driven by a historic drop in demand as billions of people stay home to counter the spread of the coronavirus.

U.S. crude inventories rose by 19.2 million barrels last week, according to the Energy Department, and the benchmark U.S. oil price Thursday was at $19.87 a barrel, the lowest in 18 years. At trading hubs in the Gulf Coast, Permian Basin in West Texas and the Bakken Shale of North Dakota, crude traded for significantly lower. In the Bakken, prices fell below $10 a barrel as sellers outnumbered buyers.

Some companies have begun shutting in wells whose oil has nowhere to go. Cimarex Energy Co. Chief Executive Thomas Jorden said pipeline companies already have asked the Denver-based driller to make voluntary output curtailments amid storage constraints, even offering breaks on transportation fees.

"We would rather shut in some of that production than continue to produce at these prices," Mr. Jorden said.

The Saudi oil surge is set to exacerbate that glut, starting with the supertankers Awtad, Jana, Aslaf and Lulu, carrying 2 million barrels apiece, which are on track to arrive this month, according to vessel-tracking data.

Most of the tankers are set to arrive in May, bringing almost 32 million barrels to Texas and Louisiana ports, though some may still change their destination. It would be the largest month for Gulf Coast imports of Saudi crude in more than six years, according to Vortexa's forecast and Energy Department import data.

However, this might be the last surge of Saudi crude to head to the U.S. Gulf Coast for a while. Following a 23-nation agreement to cut crude production, Saudi Arabia on Monday raised the price of oil it sells to U.S. refiners, making it less attractive to buy, while it cut prices to Asia.

 

It is bad, but more than likely, these vessels are owned bu ARAMCO and they are going to hold them as waterborne cargoes and wont be discharging them any time soon. They are going to use these as floating storage. They have done the same with NWE, Singapore, and into Asia. They are strategically placing their loaded vessels for when the need arises so they will be right there to offer readily available crude for those refineries.

 

Edited April 17, 2020 by ceo_energemsier
Adding

[Gerry Maddoux + 3,627]

See below

Edited April 17, 2020 by Gerry Maddoux
to factor in an interim post

[Gerry Maddoux + 3,627]

4 minutes ago, ceo_energemsier said:

It is bad, but more than likely, these vessels are owned bu ARAMCO and they are going to hold them as waterborne cargoes and wont be discharging them any time soon. They are going to use these as floating storage. They have done the same with NWE, Singapore, and into Asia. They are strategically placing their loaded vessels for when the need arises so they will be right there to offer readily available crude for those refineries.

If you're right, and you probably are, there's little we can do about this, right? Maybe nothing we want to do about it. 

Mr. Trump does not want to lose ND or Texas--especially Texas (which has been absolutely infiltrated by Left Coast liberals in the last few years). I'd sort of be surprised if this flotilla doesn't exact a countermeasure by the president. 

[BLA + 1,666]

On 4/17/2020 at 2:04 PM, ceo_energemsier said:

It is bad, but more than likely, these vessels are owned bu ARAMCO and they are going to hold them as waterborne cargoes and wont be discharging them any time soon. They are going to use these as floating storage.

 

The cargoes are already bought and paid for

Edited April 19, 2020 by BLA

[BLA + 1,666]

2 hours ago, Gerry Maddoux said:

If you're right, and you probably are, there's little we can do about this, right? Maybe nothing we want to do about it. 

Mr. Trump does not want to lose ND or Texas--especially Texas (which has been absolutely infiltrated by Left Coast liberals in the last few years). I'd sort of be surprised if this flotilla doesn't exact a countermeasure by the president. 

Trump countermeasure ?

I wouldn't bet on it.

Actually I would gladly take the other side of that bet.  

Edited April 17, 2020 by BLA

[BradleyPNW + 282]

51 minutes ago, Tom Kirkman said:

Saudi Arabia is apparently seeking an economic battle with the world and specifically against the U.S.

Yeah, no. WTI =/= the global economy. Are indy shale oil patchers that delusional? 

[ceo_energemsier + 1,818]

Sharky Marky is not going to run for the office. He is not going to stop making money!!!

The Saudis preposition a lot of their vessels loaded with their so called "cheap oil". If indeed the cargoes were under contract, they would have been under contract to be delivered  atleast 90 days before , as per nomination requirements. And these are not spot cargoes then. And it also states that the cargoes destination maybe changed.

[Gerry Maddoux + 3,627]

1 hour ago, BLA said:

Trump could lose Texas if Mark Cuban enters the race.

Surely you jest!

[BLA + 1,666]

On 4/17/2020 at 3:45 PM, Gerry Maddoux said:

Surely you jest!

EVERYONE KNOWS TRUMP WILL CRUSH BIDEN.  

 

Edited April 19, 2020 by BLA

[BLA + 1,666]

On 4/17/2020 at 2:26 PM, ceo_energemsier said:

The Saudis preposition a lot of their vessels loaded with their so called "cheap oil". If indeed the cargoes were under contract, they would have been under contract to be delivered  atleast 90 days before , as per nomination requirements. And these are not spot cargoes then. And it also states that the cargoes destination maybe changed.

Nomination cargoes ?  Spot market cargoes . The international oil industry has been turned upside down. No 90 days before  . . . . 

Anything is possible.

Very possible a negotiated price on the spot

 

Edited April 19, 2020 by BLA

[ceo_energemsier + 1,818]

13 minutes ago, BLA said:

Nomination cargoes ?  Spot market cargoes ?  Have you noticed the international oil industry has been turned upside down. No 90 days before  . . . . 

Anything is possible.

Very possible a negotiated price on the spot.

What is important is whether the oil is (1) Heavy (2) light or (3) both. 

Better yet who bought it ?  For how much$   ?

Remember, after the price crash Oct 2018 the Saudis blamed U.S. giving countries waivers as the cause ( it wasn't) .  As a result Saudis stopped shipments of heavy oil to U.S

 At the time Venezuela sanctions had been increased and all of a sudden the less desirable heavy oil was in big demand thru a good part of 2019. 

Even with VZ sanctions a good amount of VZ oil was making its way to U.S.  Don't ask don't tell. 

Now VZ has recently been shut down.  If it's just heavy oil no harm done.

Yes the market is turned upside down  and anything and everything is possible. Have you ever produced, traded , bought and sold a physical cargo of crude?

The Saudi's are/were selling CIF VLCC's of their Arabian Light into NWE, MED and even into FEA and SEA @ $22-25/bbl. Hey if I needed the type of crude 30-65/90 days out I would buy it too and if not to use , if you have the capacity to hold onto it, it was a great bargain and it will be a great bargain to some people.

Very limited amount of Venezuelan crude came into the US post sanctions, only because some companies that had JVs down there, were bringing back their "equity" crude.

There was no dont ask dont tell. Sorry to burst your conspiracy theory on that. And yes most of Venezuelan crude is heavy and they basically blend it with lighter crude oils and condensates. Before the sanctions, Venezuela was importing US shale condensates by the tanker loads to blend with their crappy oils.

 

[BLA + 1,666]

On 4/17/2020 at 4:41 PM, ceo_energemsier said:

Yes the market is turned upside down  and anything and everything is possible. Have you ever produced, traded , bought and sold a physical cargo of crude?

The Saudi's are/were selling CIF VLCC's of their Arabian Light into NWE, MED and even into FEA and SEA @ $22-25/bbl.

Yes, U.S. refiners contracted for light oil 30, 60, 90 days out. 

Quote

Hey if I needed the type of crude 30-65/90 days out I would buy it too and if not to use , if you have the capacity to hold onto it, it was a great bargain and it will be a great bargain to some people.

Very limited amount of Venezuelan crude came into the US post sanctions, only because some companies that had JVs down there, were bringing back their "equity" crude

 

Quote

There was no dont ask dont tell. Sorry to burst your conspiracy theory on that. And yes most of Venezuelan crude is heavy and they basically blend it with lighter crude oils and condensates.

 

Vz oil is very heavy very sour..  Most is bitumen.  It is different then Cd dilbit as it actually flows .  

They blend it with condensate to an extent not just to upgrade but make it more manageable to handle. 

Quote

Before the sanctions, Venezuela was importing US shale condensates by the tanker loads to blend with their crappy oils.

No kidding.  Everybody knows that.

Just like U.S. does with Canada.

Just like U.S. does with Mexico. 

Quote

 

ceo sorry I upset you

Edited April 19, 2020 by BLA

[ceo_energemsier + 1,818]

1 hour ago, BLA said:

Yes, U.S. refiners contracted for light oil 30, 60, 90 days out.  There is a real shortage of light oil.  Who is going to but it ? The half of the refineries that use light are producing more than they can handle in the shale basins.  

Most of the Vz oil coming to GOM was Russian/Rosneft that was barter payment for their Billions lent to Vz government or thru Trading firms.  Vitol was very active post sanctions.  Chevron would come in third. 

There was don't ask don't tell Rosneft tankers were documented showing ship to ship transfers off St. Croix and tracked to La. for unloading. 

Vz oil is very heavy very sour..  Most is bitumen.  It is different then Cd dilbit as it actually flows .  

The blend it with condensate to an extent not just to upgrade but make it more manageable to handle. 

U.S  started buying Vz oil after the U.S. supply declined and Saudis were getting greedy.  The Vz oil was the reason half (4mm bbls/day) the refineries on the GOM upraded their refineries to handle the crude . That went well until the industry was nationalized and assets siezed.  Early 2000's the interest developed in the CD tar sands.

No kidding.  Everybody knows that.

Just like U.S. does with Canada.

Just like U.S. does with Mexico. 

ceo sorry I upset you.  Didn't know you were that sensitive.  You are an expert.  You get a trophy.  Everybody gets a trophy.  

 

LOL

 

Yawn, didnt your Mommy burp you after your feeding? LOL

Edited April 17, 2020 by ceo_energemsier

[ronwagn + 6,290]

4 hours ago, Gerry Maddoux said:

Surely you jest!

First he would have to get rid of Biden and Bernie. 

[BLA + 1,666]

On 4/17/2020 at 7:06 PM, ceo_energemsier said:

Yawn, didnt your Mommy burp you after your feeding? 

Relax.  If you had not noticed everyone that posts on this forum is an expert  .  .  .  .  at least they are in their own mind.  .  .  .  Including me .  .   .   and you. 

My comments are not a conspiracy theory.  Do you know anybody at Vitol.  Don't attack the person if they disagree , debate the issue.

Take it for what it is.

This virus is stressing everyone out.  Multiply that 10X for anyone that is associated in any way with the oil industry. Especially, the shale oil business.  

Chill

No need to insult people personally. I only do so when attacked and return in kind.

Edited April 19, 2020 by BLA

[BLA + 1,666]

1 hour ago, ronwagn said:

First he would have to get rid of Biden and Bernie. 

 

 

.

Edited April 18, 2020 by BLA

[ceo_energemsier + 1,818]

30 minutes ago, BLA said:

A Mommy joke. Very original.  Not.

Relax.  If you had not noticed everyone that posts on this forum is an expert  .  .  .  .  at least they are in their own mind.  .  .  .  Including me .  .   .   and you. 

I only attack when attacked first.  My comments are not a conspiracy theory.  Do you know anybody at Vitol.  Don't attack the person if they disagree , debate the issue.

This forum is one part informative , one part entertainment and one part jousting/debating.  

Though, there are some real experts that provide helpful info intertwined.  For example there are some that are involved in shale as landowners or mineral rights owners like wrs and Maddoux.  There is James that knows his way around any ocean rig and Doug that can answer any question about conventional reservoirs. There are some independent shale producers or people that work for them. Then there is this van Eck guy that is a renaissance man of sorts that knows something about everything. Then there is you.  Nobody can copy and paste like you. (just kidding)

Take it for what it is.

If I offend you don't read my posts.  Nobody has to accept my opinions as gospel. Simple.

This virus is stressing everyone out.  Multiply that 10X for anyone that is associated in any way with the oil industry. Especially, the shake oil business.  

Chill

No need to insult people personally. I only do so when attacked and return in kind.

 

 

I didnt take it personally, I was having fun, come on , dont get your panties up in a bunch LOL . I know a few people @ VITOL and we trade with them as and when needed. I dont think I attacked you. The crude oil trade specially for the US market inbound is very transparent more so than any other country on this planet and I am pretty sure about it (lot of people have gone to prison for violating sanctions and lot of companies have been fined for the same thing, so yes I will say it again dont ask dont tell re to what you mentioned about Venezuelan crude post sanctions to me is a conspiracy therory) , let me see I have been doing it since only hmmmmmmmmmmmmmm well I guess for just about ever and yes engaged in just about every aspect of the oil, gas, natural resources, petchem industry as well from owning mineral rights, to funding and financing, to oil and gas production, some midstream, refining and trading and sales.

Cheers!!!!!

To everyone's good and better health and wealth

 

 

[ceo_energemsier + 1,818]

3 hours ago, BLA said:

Yes, U.S. refiners contracted for light oil 30, 60, 90 days out.  There is a real shortage of light oil.  Who is going to but it ? The half of the refineries that use light are producing more than they can handle in the shale basins.  

Most of the Vz oil coming to GOM was Russian/Rosneft that was barter payment for their Billions lent to Vz government or thru Trading firms.  Vitol was very active post sanctions.  Chevron would come in third. 

There was don't ask don't tell Rosneft tankers were documented showing ship to ship transfers off St. Croix and tracked to La. for unloading. 

Vz oil is very heavy very sour..  Most is bitumen.  It is different then Cd dilbit as it actually flows .  

The blend it with condensate to an extent not just to upgrade but make it more manageable to handle. 

U.S  started buying Vz oil after the U.S. supply declined and Saudis were getting greedy.  The Vz oil was the reason half (4mm bbls/day) the refineries on the GOM upraded their refineries to handle the crude . That went well until the industry was nationalized and assets siezed.  Early 2000's the interest developed in the CD tar sands.

No kidding.  Everybody knows that.

Just like U.S. does with Canada.

Just like U.S. does with Mexico. 

ceo sorry I upset you.  Didn't know you were that sensitive.  You are an expert.  You get a trophy.  Everybody gets a trophy.  

 

LOL

 

BTW, you dont need to backtrack, you edited your original post. If you cant stand behind your original words then dont use them to begin with LOL

Your original post in case, your memory is worn out dealing with the world's problem and corona stress

Stay safe, stay healthy !!!

____________________

BLA quoted one of your posts in a topic.

Posted in Flotilla of Saudi Oil Threatens to Worsen U.S. Supply Glut   59 minutes ago, ceo_energemsier said: Yes the market is turned upside down  and anything and everything is possible. Have you ever produced, traded , bought and sold a physical cargo of crude? The Saudi's are/were selling CIF VLCC's of their Arabian Light into NWE, MED and even into FEA and SEA @ $22-25/bbl. Hey if I needed the type of crude 30-65/90 days out I would buy it too and if not to use , if you have the capacity to hold onto it, it was a great bargain and it will be a great bargain to some people. Very limited amount of Venezuelan crude came into the US post sanctions, only because some companies that had JVs down there, were bringing back their "equity" crude. Most of the Vz oil coming to GOM was Russian/Rosneft that was barter payment for their Billions lent to Vz government or thru Trading firms.  Vitol was very active post sanctions.  Chevron would come in third.  59 minutes ago, ceo_energemsier said: There was no dont ask dont tell. Sorry to burst your conspiracy theory on that. And yes most of Venezuelan crude is heavy and they basically blend it with lighter crude oils and condensates. There was don't ask don't tell Rosneft tankers were documented showing ship to ship transfers off St. Croix and tracked to La. for unloading.  Vz oil is very heavy very sour..  Most is bitumen.  It is different then Cd dilbit as it actually flows .   The blend it with condensate to an extent not just to upgrade but make it more manageable to handle.  U.S  started buying Vz oil after the U.S. supply declined and Saudis were getting greedy.  The Vz oil was the reason half (4mm bbls/day) the refineries on the GOM upraded their refineries to handle the crude . That went well until the industry was nationalized and assets siezed.  Early 2000's the interest developed in the CD tar sands. 59 minutes ago, ceo_energemsier said: Before the sanctions, Venezuela was importing US shale condensates by the tanker loads to blend with their crappy oils. No kidding.  Everybody knows that 59 minutes ago, ceo_energemsier said:   ceo sorry I upset you.  Didn't know you were that sensitive.  You are an expert.  Your Mommy told me do.

 

 

[ceo_energemsier + 1,818]

(Bloomberg) -- Saudi Arabia and Russia signaled they may be open to further output cuts after the latest OPEC+ deal to curb global oil supplies failed to stem crude’s downward spiral.

The two nations will “continue to closely monitor the oil market and are prepared to take further measures jointly with OPEC+ and other producers if these are deemed necessary,” Russian Energy Minister Alexander Novak and his Saudi counterpart Prince Abdulaziz bin Salman said in a joint statement published after a phone call.

Oil has plunged about 20% in New York since the group on Sunday agreed to trim worldwide production by an unprecedented 9.7 million barrels a day, as lockdowns aimed at containing the coronavirus cause the biggest demand slump in history. Prices hit a fresh 18-year low below $19 a barrel on Friday.

The Organization of Petroleum Exporting Countries projected on Thursday that even full implementation of the cuts won’t prevent a surplus in the second quarter, when demand for its crude will fall to the lowest in three decades.

The joint statement on Friday echoes earlier comments by Saudi Arabia’s bin Salman, who has said that his country is ready to cut oil production further if needed when the OPEC+ alliance meets again in June. “Flexibility and pragmatism will enable us to continue do more if we have to,” he said on Sunday.

Russian Pain

The oil-price crash has been particularly painful for Russia. The nation’s coffers will get less than $1 for each exported barrel of oil, according to Bloomberg calculations based on data from the Russian Finance Ministry.

Riyadh signaled on Friday it was making a swift start to implementing its agreed cuts, with an announcement from state-run Saudi Aramco that it would supply customers with 8.5 million barrels a day as of May 1. That’s almost 4 million a day below planned sales in April.

Nonetheless, it’s uncertain whether the kingdom and its partners really have the appetite for further action right now.

The 8.5 million-barrel level represents a kind of floor for Saudi oil production because cutting any further would jeopardize output of associated gas, according to Helima Croft, head of commodity strategy at RBC Capital Markets LLC. Domestic gas demand for power generation has been rising sharply in the kingdom for years.

There’s also the signal Riyadh sent with its latest set of official selling prices, which fine-tune the cost that customers pay in relation to international oil prices. Aramco deepened the discounts for Asian buyers in May, an indication that it seeks to preserve its share of the fastest-growing market even as the production cuts take effect.

It’s questionable too whether the 23-nation OPEC+ coalition, led by the Saudis and Russia, has the appetite for renewed negotiations following this month’s epic bout. Reaching the agreement on April 12 took four days of contentious meetings, which included a walkout by Mexico and intervention by U.S. President Donald Trump.

[Old-Ruffneck + 1,235]

2 hours ago, BLA said:

Relax.  If you had not noticed everyone that posts on this forum is an expert  .  .  .  .  at least they are in their own mind.  .  .  .  Including me .  .   .   and you. 

Not me, I am just an old ruffneck. But I did enter Publishers Clearinghouse lol

[0R0 + 6,251]

2 hours ago, ceo_energemsier said:

There’s also the signal Riyadh sent with its latest set of official selling prices, which fine-tune the cost that customers pay in relation to international oil prices. Aramco deepened the discounts for Asian buyers in May, an indication that it seeks to preserve its share of the fastest-growing market even as the production cuts take effect.

It’s questionable too whether the 23-nation OPEC+ coalition, led by the Saudis and Russia, has the appetite for renewed negotiations following this month’s epic bout. Reaching the agreement on April 12 took four days of contentious meetings, which included a walkout by Mexico and intervention by U.S. President Donald Trump.

By my thinking of what the Saudis were trying to accomplish in NWE and China was to front run Russia so that it is forced to cut production as its export chain is clogged up downstream and pipeline flow comes to a halt and the fields can't be produced any longer. Somehow, while they managed to  front run Russia in NWE it wasn't obvious they managed anything in China, as they didn't get unloaded and other's tankers were coming ahead of them. I am not up to date about what they are doing in China now. But the aggressive discount appears intended to front run the Russians still further. 

We see that it had the desired result as Russia came on board with cuts and OPEC+ is now ready to get going with a second round, as they obviously had not expected so much demand would be curtailed so much longer. I believe they got Russia on board because they had actually managed to clog up the Russian export chain and they had to start to cut where they could. At which point they would be happy to "participate" in further "coordinated" cuts. The Saudis are obviously keeping the pressure on Russia. 

 

On the demand end, the US has about 50% of GDP in counties that have had no new CV19 cases this week. They will start opening up next week. Those are rural counties and industrial towns. 

 

[ceo_energemsier + 1,818]

35 minutes ago, 0R0 said:

By my thinking of what the Saudis were trying to accomplish in NWE and China was to front run Russia so that it is forced to cut production as its export chain is clogged up downstream and pipeline flow comes to a halt and the fields can't be produced any longer. Somehow, while they managed to  front run Russia in NWE it wasn't obvious they managed anything in China, as they didn't get unloaded and other's tankers were coming ahead of them. I am not up to date about what they are doing in China now. But the aggressive discount appears intended to front run the Russians still further. 

We see that it had the desired result as Russia came on board with cuts and OPEC+ is now ready to get going with a second round, as they obviously had not expected so much demand would be curtailed so much longer. I believe they got Russia on board because they had actually managed to clog up the Russian export chain and they had to start to cut where they could. At which point they would be happy to "participate" in further "coordinated" cuts. The Saudis are obviously keeping the pressure on Russia. 

 

On the demand end, the US has about 50% of GDP in counties that have had no new CV19 cases this week. They will start opening up next week. Those are rural counties and industrial towns. 

 

I agree with your assessment of the Saudi circling their wagons around the Russkies. I also have a feeling that they had some encouragement to do so by interests in the US, while it may appear to most people that the Saudi action was directed at US shale as  well but their main and intended target were the Russkies. The Saudis dont want Russian influence in their backyard in Syria and Iran = Yemen and so on so forth. They flooded the Euro Med and NWE markets plus the FEA and SEA markets with their crude aboard their own tankers or chartered tankers. It worked against the Russkies. Again as I said, there may have been a big push/nudge/green light even an agreement with US interests to do so. It may hurt the US oil industry in the short and mid term and no one expected or predicted a 30mm bpd demand destruction and in such a short time frame.

The Saudis used their crude flood into the traditional markets of Russian Urals as the stick. In regards to China, they now have strategically placed their crude on board vessels within easy reach of Chinese buyers and that has kept Russian ESPO and Urals out of the regional market there , more or less. Selling or offering to sell/placing their Saudi barrels into the heart of the Asian markets on a CIF basis for 22-25$/bbl, the Russkies couldnt compete with that. They are now also supplying crude to fill the SOE reserves as well as pe reserves in China.

There were so many distressed cargoes in the Black Sea and Med and NWE, it was unbelievable seeing the traders trying to get rid off them. They made deals for 18$/bbl to get rid of some.

 

The Saudi's successfully demonstrated to the Russkies that they can indeed undercut them and can take the fist to the chin doing it but something reasonable had to be done to stem the crude oil price free fall.

 

 

Edited April 18, 2020 by ceo_energemsier

[RSD + 41]

It seems like a lot of these sensational articles have no idea of the oil market, refinery capacities etc and just write stuff that sounds alarming to anyone with no knowledge of the industry.  "20 Tankers heading to Texas" - if the dumbass writers had half a clue they would know that a VLCC holds 2 million barrels, and the Motiva refinery sucks a VLCC dry every eighty hours (3 1/3 days) - and the Motiva refinery can't take Permian crude as it isn't configured for that - it is specifically set up for Arab Light.  So do the maths and that means that Motiva takes almost ten VLCC's per month - so there's half of the highly alarming fleet of 20 tankers accounted for already.  Of the remaining ten tankers, probably 2 or 3 will be filling storage at Motiva, and the rest will be cargoes that were already sold into LA - remembering that a lot of larger refineries in LA are owned by companies that are refiners but not oil producers - e.g. Marathon etc

I can assure you that the Saudis wouldn't be stacking tankers of unsold crude off the U.S. coast waiting to find buyers - it would all have been sold before it was loaded at Ras Tanura.

One would hope that if this guy is the president of an oil company in Texas that he would know enough about the oil market in Texas to know that Motiva can't take Permian oil...

 

Edited April 18, 2020 by RSD