The World’s Most Dangerous Black Markets

[Tom Kirkman + 8,860]

With the impending U.S. sanctions against Iranian oil less than a month away, it appears that Iran is already preparing to divert much of its oil exports from legal markets to the black markets.  Iranian crude oil tankers started turning off their ship locations transponders weeks ago.

It seems pretty clear to me that as oil prices continue to rise and as U.S. sanctions against Iranian oil start to bite, Iran's activities in selling its crude oil on the black market will increase.

It also seems pretty clear to me that the steep discounts for black market oil should curtail and undercut the higher priced legal market oil, which is being artificially inflated by the likes of Saudi Arabia and nervous oil traders who hate uncertainty.

To alleviate some of the MSM and oil trader uncertainty, kindly take note that much of Iranian oil will simply be diverted to the lucrative black markets.  Iranian crude oil is not going to disappear from global markets, it will simply be more difficult to track and determine how much is being produced and exported in secret, on the black markets

Here's an article from Yale University about black market oil.  Well worth taking the time to read:

The World’s Most Dangerous Black Markets

Oil is still the world’s leading energy source, with growing demand, a fluctuating pricing system, and much of its production in volatile regions. The oil market’s value is larger than the world’s valuable raw metal markets combined, with an annual production valued at US$1.7 trillion. A flourishing black market is no surprise, with about US$133 billion worth of fuels stolen or adulterated every year. These practices fund dangerous non-state actors such as the Islamic State, Mexican drug cartels, Italian Mafia, Eastern European criminal groups, Libyan militias, Nigerian rebels and more – and are a major global security concern.

● Most oil is transported by sea, and most international waters are beyond any national jurisdiction.

● The illegal oil trade may offer enough benefits to producers and government officials to discourage investigation.

[bill352 0]

Just joined up. Am really disturbed by the price of gasoline in this country.

[bill352 0]

I have managed to travel to many foreign countries and have noticed that even in the poorest countries there is a mass transit system. This help the poor get from point A to point B.  In thes poor countries only the wealthy own automobiles and the general public relies on mass transit.  Here in America, rural America has no mass transit and therefore are forced to own an automobile. Thusly paying exorbitant prices for gasoline to get to a job. The oil companies and the elected officials are responsible for this unfair practice plus we are exporting our oil and by products. This a no bull statement I hav managed to live and work in 41 foreign countries and I have seen it all first hand!  What I want to know is do other Americans believe big oil has us over a barrel and if so what are we going to do about it?

[Tom Kirkman + 8,860]

42 minutes ago, bill352 said:

I have managed to travel to many foreign countries and have noticed that even in the poorest countries there is a mass transit system. This helps the poor get from point A to point B.  In these poor countries only the wealthy own automobiles and the general public relies on mass transit.  Here in America, rural America has no mass transit and therefore are forced to own an automobile. Thusly paying exorbitant prices for gasoline to get to a job. The oil companies and the elected officials are responsible for this unfair practice plus we are exporting our oil and by products. This a no bull statement I have managed to live and work in 41 foreign countries and I have seen it all first hand!  

What I want to know is do other Americans believe big oil has us over a barrel and if so what are we going to do about it?

Hmmmm.  Well, I'm an American.  Been living in Southeast Asia for over 15 years.  And I've dealt with Oil Companies and EPCs in over 30 countries.  Done a fair bit of international travel.

Rural areas in many countries in SE Asia tend to have pretty lousy mass transit systems, not just the U.S. 

125cc motorcycles tend to be the main source of low cost transportation in rural areas in much of this part of the world.

Anyway, "Big Oil" doesn't really control the price of oil on the markets.  Neither does OPEC, despite their flowery rhetoric.  Oil traders mostly nudge oil prices up and down, based on fear and greed  [ tip of the hat to @Jan van Eck ]. 

Wars, weather, international politics, trade wars, sanctions, global GDP, inflation, taxes, petrol subsidies that skew oil prices, environmental regulations imposed by governments, U.N. gnashing of teeth about climate change - these factors probably affect international oil prices more than this nameless, faceless bogeyman labeled "Big Oil".

"Big Oil" can only control 1 side of the Supply / Demand equation: Supply.  Like one hand clapping.

As the largest traded commodity in the world, oil prices tend to fluctuate up and down, fairly uncontrollably.  As much as I would personally like to see some stability in global oil prices, I cannot stop the impending oil price roller coaster ride.  Expect to go through another stomach churning oil price ride, with the current irrational exuberance of oil bulls driving up oil prices toward triple digits again.  The higher the oil prices rise, the steeper the subsequent collapse.  Seems not much was learned from the previous oil price churn / roller coaster crash & burn cycle around 2014 - 2015.  Here we go again...

What can anyone do about?  Not much.  Blaming "Big Oil" won't really accomplish anything.

All I can do about it is have some laughs shooting my mouth off about what I see and what my observations are.

Just my opinion; as always, you are free to disagree.

[Jan van Eck + 7,558]

Actually, you can do quite a bit about it.  But first, you have to elect governments, especially inside the USA, that are prepared to fire the bureaucracies and vanquish the Giant Administrative State. 

 

For example, you have this "private automobile," running on gasoline, and containing thousands of Regulations that dictate everything from the emissions to the tires.  But if you are free to do what you want, then innovation rapidly displaces oil.  Specifically, some entrepreneur will figure out how to pull that gas engine out of there and drop in a steam engine.  Then our inventor fuels the steam engine on biomass, i.e. dried cow dung, or wood chips, whatever he dreams up.  You don't have that today because the Administrative State, in the persona of the DOT, prevents that from being street legal. But it is not as if it could not be done. 

And you have the same situation with home heating, now typically done with fuel oil or propane (or natural gas).  Nothing to stop home heating from going to biomass boilers - except State Administrators, who in many areas flatly forbid it.  In this way, oil is perpetuated as a fuel source, and its consumption continues unabated. 

I am a great believer in innovation.  Innovation always runs up against the brick wall of bureaucrats. The real challenge is to dispense with the vast layers of bureaucrats.  I remain pessimistic that this will ever occur.  The challenge remains political. 

[Top Oil Trader + 469]

Did some research you are indeed right.

 

 

Edited October 11, 2018 by Top Oil Trader

[Tom Kirkman + 8,860]

6 minutes ago, Top Oil Trader said:

Tom how do you know its not opec that moves the prices up, you think traders have that much power? dont think so.

OPEC is one factor in oil prices.  There are many, many other factors. 

Historically, OPEC's bark seems louder than their bite.  To me, anyway.  While OPEC can nudge markets up or down temporarily, there are a myriad of other global factors that can affect markets.

Rightly or wrongly, I tend to view oil traders as one of the main drivers of oil price trends.  I'm open to being convinced otherwise, though.

[Tom Kirkman + 8,860]

28 minutes ago, Top Oil Trader said:

Did some research you are indeed right.

The world’s biggest oil and gas companies in 2018

Two of the world’s top ten oil and gas companies are based in China, with China Petroleum & Chemical Corporation emerging as the world’s biggest by revenue at $362 billion. Hydrocarbons-technology.com lists the world’s biggest oil and gas companies based on 2017 revenues.