Would a War in the Middle East benefit the Oil Industry?

[James Regan + 1,776]

Would a war in the Middle East benefit the oil industry?

[NickW + 2,714]

5 hours ago, James Regan said:

Would a war in the Middle East benefit the oil industry?

The one benefit it would bring is that many countries round the world would finally realise we now have technology and scale to largely do without it. 

[James Regan + 1,776]

29 minutes ago, NickW said:

The one benefit it would bring is that many countries round the world would finally realise we now have technology and scale to largely do without it. 

Seriously? We are prepared and if oil suddenly disappeared we could largely do without it.

Or are you talking about war?

[Tom Kirkman + 8,860]

6 hours ago, James Regan said:

Would a war in the Middle East benefit the oil industry?

War is never good.  War is the worst option.

[PeterfromCalgary + 60]

Well prices would spike up but this would be very short term.  Than we would have a recession caused by high prices and demand would crash hurting the industry.  The best thing is price stability at a price where producers can make money and consumers can afford.  I would guess that is around $60 to $80 depending on how hot the economy is.  Ideally as time progresses this price would increase with inflation but not more.

War is also bad for a whole lot of other reasons not related to the price of oil!

[James Regan + 1,776]

Granted the title is about the Middle East but let’s consider the catalyst driving these sanctions to Iran and other areas of the world which all revolve around one thing big business which masquerades in all forms from regime change to security but has one driving force Energy.

https://www.democracynow.org/2019/1/30/a_war_for_oil_bolton_pushes

Houston chronicle refers to many points against the Chinese trade war but starts its article with Steel Pipe I assume they are referring to drill pipe, who buys and uses Chinese drill pipe? Anyone in the business knows to stay clear of Chinese made DP.

What they should be concerned with is that 40% of the worlds Barite ( used to make drilling fluids heavier) to hydrostatically prevent blowouts, in fact it’s the primary source of well control, which comes from China.

https://www.houstonchronicle.com/local/gray-matters/article/us-china-trade-war-impact-oil-and-gas-industry-13580334.php

Nobody wants to say it but I believe by default any war in the Middle East has in the past empowered the IOCs and The E&P sectors and now even more so would place the USA in a very powerful position in the US regional oil business and internationally. 

The US manufacturing side of The E&P side has taken a huge hit, look at Weatherford who is now in chapter 11 and many of the large manufacturers such as Cameron, GE, etc etc all suffering.

Like, agree or not by default IMO the industry would benefit from any kind of interruption in particular upstream.

John Bolton currently in Israel is continuing the rhetoric against Iran which counters DTs dovish comments to “make Iran great again” - seems to be a fundamental short circuit between DT and his advisors.

DT seems to be back peddling again and is now being perceived as weak by Iran and indecisive as his last tweet implies.

 

Edited June 23, 2019 by James Regan

[BenFranklin'sSpectacles + 762]

15 hours ago, NickW said:

The one benefit it would bring is that many countries round the world would finally realise we now have technology and scale to largely do without it. 

 

14 hours ago, James Regan said:

Seriously? We are prepared and if oil suddenly disappeared we could largely do without it.

Or are you talking about war?

The comment is unclear, but I think @NickW means two things would happen:
1)  The world will increase oil production outside the war zone.  E.g. if the Middle East devolved into a major war, the world would wean itself off Middle Eastern oil. 
2)  The world would accelerate efforts to reduce oil consumption. 

I don't think @NickW meant to say we're prepared "if oil suddenly disappeared".  It's obvious the world isn't prepared for all oil disappearing, and it's obvious all oil wouldn't disappear.  Only some of the oil would disappear, and its "disappearance" would be more of a slow decline.  There might be days when the Strait of Hormuz is shut down, but there will also be days when it's not.  The world's response to this would be to keep the strait as open as possible while weaning itself off that oil. 

I think #2 will happen whether the Middle East devolved into war or not.  We'll always need petroleum products, but modern technology could wean us off the vast majority of them.  All that's needed is the will to implement that technology:
1)  Most transportation will transition to electric.  Long-haul transport might stay on a combination of oil and natural gas, but they could also be run on hydrogen (long-haul trucks, aircraft) or nuclear (ships).  Most transportation is beginning this process already. 
2)  The vast majority of plastics could be decomposed into crude and recycled, cutting petrochemical oil demand to a fraction of current levels.  This is happening already. 
3)  Synthetic petroleum products could be scaled up.  We already make synthetic lubricants; there's nothing stopping us from making everything else.  Any source of carbon - wastes, biomass, coal - could be used as feed stock.  Modern nuclear plants could provide a nigh endless source of cheap energy for these processes.

So yes, the world could wean itself off drilled oil at acceptable cost.  It's unlikely because drilled oil is so cheap, but it could be done.  If OPEC nations are smart - which isn't a bet I'm willing to take - they'll realize this and behave themselves. 

Then again, transitioning away from OPEC oil will enrich developed nations.  It might be in their best interests to spark that war.