Can SPR Offset Lost Iranian Crude?

[jaycee + 348]

10 hours ago, Dennis Coyne said:

Trump could indeed declare an emergency, that might have the effect of raising prices, if people believed him.  If not, he would simply look foolish, but he does that a lot, in any case if the SPR is emptied during an "imagined emergency"  (as $85/b oil is no emergency at all), then the US would be vulnerable if a "real emergency" arose as there would be no strategic reserve if the Iranians set off a major war by blocking the Strait of Hormuz.  Now I am not suggesting Trump is smart enough to realize that is a poor policy, but I imagine you are smarter than Trump.

In the event of a real emergency Trump could simply solve it by reversing his policy that caused the oil price to rise in the first place i.e. make peace with Iran. He made peace with NK and got a few skeletons, NK closing down some obsolete nuclear testing facilities and a vague promise make Korean peninsula nuclear free but with no time limit or agreed plan stated on how to do it, totally pointless. Doing the same with Iran would therefore not be out of character. All it will take is a big meeting producing a bit of paper with some words saying Iran promises not to build long range missiles, but missing any reference to independent verification inspectors, and Trump saying its the greatest deal ever and how he has saved the world from high oil prices. 

[Jo Mack + 43]

I don't believe the SPR is an issue and I doubt very seriously if Trump will be shaking Rohanis hand anytime soon.  They're flying missiles in Syria with "death to America" written on the sides. The Iranian groups fighting against the govt blew up an oil well the day before yesterday.  Iran is a mess heading for its own destruction from within.  Trump may want to meet with Rhohani as he did with Kim in Shanghai but there will be no relief for them with the US.  Sanctions will become the reality for Iran and NK and handshakes with the US will be just that - handshakes.

[ceo_energemsier + 1,818]

8 hours ago, Jo Mack said:

I don't believe the SPR is an issue and I doubt very seriously if Trump will be shaking Rohanis hand anytime soon.  They're flying missiles in Syria with "death to America" written on the sides. The Iranian groups fighting against the govt blew up an oil well the day before yesterday.  Iran is a mess heading for its own destruction from within.  Trump may want to meet with Rhohani as he did with Kim in Shanghai but there will be no relief for them with the US.  Sanctions will become the reality for Iran and NK and handshakes with the US will be just that - handshakes.

Iran thinks they can be " a regional super power" but their economy is failing, they have massive internal strive and large scale anti gov sentiment... they can suppress it by force only for so long....

[Dennis Coyne + 82]

15 hours ago, jaycee said:

In the event of a real emergency Trump could simply solve it by reversing his policy that caused the oil price to rise in the first place i.e. make peace with Iran. He made peace with NK and got a few skeletons, NK closing down some obsolete nuclear testing facilities and a vague promise make Korean peninsula nuclear free but with no time limit or agreed plan stated on how to do it, totally pointless. Doing the same with Iran would therefore not be out of character. All it will take is a big meeting producing a bit of paper with some words saying Iran promises not to build long range missiles, but missing any reference to independent verification inspectors, and Trump saying its the greatest deal ever and how he has saved the world from high oil prices. 

JC,

 

Also note that the SPR would need to be refilled and the oil will need to be purchased at market oil prices, making peace with Iran would help bring prices down, on that I agree, but there can always be conflicts between Iran and Saudi Arabia and in a worst case scenario Shite and Sunnis nations in the Persian Gulf get in a war and take 20 Mb/d off the World Market due to a major war.  Under such a scenario, we would not want to have an empty SPR.

In short, it's a really dumb idea to sell down the SPR, exactly the kind of policy Trump is likely to follow.  I am just suggesting that Trump <I>may</I> not be that dumb, we will have to wait and see.

[ceo_energemsier + 1,818]

On 10/1/2018 at 12:52 PM, Kaiser Soze said:

Onshore wells can't hold the fort haha. 1 offshore deepwater basin is equivalent to something like 1000 onshore basins?

To flood the market you need offshore oil pouring in like in 2010-2013.

Most oil company stocks, including big oil, still haven't quite recovered? Look at schlumberger, haliburton etc.

Still at close to 10 year lows or something. Very depressing earnings - always talking about cutting operational costs, keeping it lean and nothing about capex.

Re. the oil company stocks performance:

https://marketrealist.com/2018/10/exxonmobil-is-expected-to-grow-29-in-the-third-quarter

 

 

[ceo_energemsier + 1,818]

On 10/1/2018 at 11:56 AM, Kaiser Soze said:

That's way too naive. Saudi cannot just 'ramp up production'. They need OPEC approval (which includes Iran) and there are infrastructure constraints (because of previous collapse in oil prices).
 

When the shares of O&G companies rebound (as earnings skyrocket), then you can say there is capacity to increase production (because only then companies can increase capex). Until then, we're heading for oil shortage.

Saudi Arabia did just that, ready to ramp up production, capture market share along with the Russkies in secret deal, no approval from Iran.

[Jo Mack + 43]

Libya looks like it's gearing up.  Already added 300,000 bbls in Sept.