Are U.S. and EU mega stimulus packages good for oil prices ? It cuts both ways.

[Roch + 537]

At first blush the huge influx of stimulus money will juice the economy and thus have a positive affect on WTI and Brent price.  

But when you delve into the specifics we will see the enormous commitment to Green R&D, Investment/grants , tax credits , increased gasoline taxes all followed up with new green legislation mandating implementation it will put the scare in oil companies, oil investors and Oil States. 

The Green $ Trillions will not affect oil prices short term.  The stimulus package should actually be positive for prices.

However, the producers will see the writing on the walls.  I see the fear of Stranded Oil Assets setting in.  Sell it while you can mentality will take hold .

Iran, with the help of China will double oil production over next few years.

Iraq plans to increase production from 4+ mm bbls/day to over 7 mm bbls/day.  

UAE ADNOC plans to increase oil production substantially.

Libya has commenced and built up production substantially over past 6 months.

These few examples a but a sampling.  All OPEC oil States have similar plans.   

Increased Green stimulus + increased production = lower prices

What's the timing ?

 

 

Edited January 19, 2021 by Roch