The Paris Attacks Will Be Largely Ignored by the Oil Market - Oil Review
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Market Summary
At 4:29 PM ET: Nov '15 light sweet crude futures are down $0.99, or2.37%, at $40.75 a barrel in Nymex electronic trading. Nov '15 gold futures are down $14.90, or 1.37%, at$1,068.80 an ounce in electronic trading. Dec '15 corn futures closed up1.75 today, or 0.49%, at 361.75 cents a bushel.
WTI Crude Oil Price - 30 years:
M.N.: double top, bear market, $20 - $40 range.
Nabiullina and others are correct: MOSCOW, November 3. /TASS/. Oil prices may stay at low levels in foreseeable future, Russian Central Bank Chief Elvira Nabiullina said on Tuesday.
"The oil market is being structurally transformed, which demonstrates that oil prices may stay low for a long period of time. Many are saying about the end of commodity super-cycle," Nabiullina said.
M.N. It is a different (from 2000 - 2015) market, with different market forces, players and dynamics:
- Crucial factors for oil prices in late 2015 - early 2016 - Blogs
- Russia's Oil Rivalry With Saudis Masks the Bigger Iranian Threat
- Iran To Double Gas Exports To Iraq Under New Deal
- Low Oil Prices Will Not Last (looks like contrarian opinion)
- Administration rejects TransCanada's plea to pause Keystone review
- Russian Oil Output Hits Post-Soviet High, Bests Saudi Arabia
- Russian Finance Minister Says Reserve Funds Running Out
- Despite US-led campaign, Islamic State rakes in oil earnings | The Kansas City Star
- Islamic State Raked in Over $1 Billion in 2014 - Washington Free Beacon
- US Stocks Are Mixed in Midday Trading; Oil Price Falls - ABC News
- Commodities - NYTimes.com
- Oil nations feel the strain of Opec’s continuing price war - Telegraph
- Bangkokpost.com
- Oil Market Showdown: Can Russia Outlast The Saudis? | OilPrice.com
- Russia: And the Danger of an Irrelevant Gas Station | Edward Goldberg
- Saudi Arabia's Oil War With Russia - Bloomberg View
- Russia faces battle with Saudi Arabia over European oil market share — RT Business
- Japan helps Saudi boost use of leased...
- Iraqi forces and militia seize most of Baiji refinery: officials | Reuters
- $50 Oil for 15 Years Isn't What Scares Bank of Russia Governor - Bloomberg Business
- Putin's Syria strikes are a long-term play for higher oil prices | World news | The Guardian
- Why oil prices could sink to $15 a barrel
- TASS: Business & Economy - Oil prices to stay low in foreseeable future — Russian Central Bank Chief
- ISIS is making the biggest threat to oil prices even worse - Business Insider
- Saudi Oil Is Seen as Lever to Pry Russian Support From Syria’s Assad
M.N.: This market appears to be immune to geopolitical shocks (unlike the early 2000-s market which was ready to jump like a nervous maiden for any or no reasons). Some good doctors gave this young lady a good vaccine, but most importantly, she grew out of it. How much are ISIS oil sales a factor in determining world oil price? And to what extent Russian, French and American (and others) military actions against ISIS and specifically against their means and ways of transporting oil might affect the world oil prices?
"In addition, a more directed campaign against the oil resources that have been funding ISIS fighters and their networks will be undertaken, to cut the financial support of the group. But ISIS' oil supplies have already resisted most of these efforts -- their operations are run in small-market, "cash-and-carry" arrangements, using pickup trucks and oil barrels. There is not much of a centralized marketplace or infrastructure to target. When one nexus point of delivery is shut down, three more pop up in its place. As with much of the history of Middle East oil, it is practically impossible to stop the flow of petrodollars.
And ISIS control of oil is extremely limited, perhaps as little as 30,000 barrels a day, not a significant amount to global production. Most of it remains to be locally used, although some refined barrels slip into Turkey and Lebanon. And it is in refining that ISIS really makes most of its revenue -- but mostly these are mobile units that are difficult to attack.
Despite a strong effort to shut this important source of revenue already, it is now widely acknowledged that completely stopping the flow of oil in Syria is impossible.
Nor does it seem likely that new military action against ISIS will have a geopolitical effect on oil elsewhere in the region. Iran and Russia are not about to abandon their production plans for the coming year; neither are the Saudis."
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The horrible events in Paris have stunned and frightened the world. But already, people are asking what effect these monstrous crimes will have upon the financial markets, and want to know what impact a new, more aggressive offensive against ISIS might have upon oil prices. As stunning as the murders in France and the likely response to them might be, I don't believe there will be much change to the trajectory of oil because of the attacks.
There will be a lot of added pressure to make a unified military response to the Islamic State strongholds in northeastern Syria as a result of the Paris attacks. Even though the United States has been engaged in a bombing campaign in northwestern Iraq, and the Russians have begun to attack other ISIS targets in Syria, there will undoubtedly be a call to put soldiers on the ground to directly combat ISIS forces.
In addition, a more directed campaign against the oil resources that have been funding ISIS fighters and their networks will be undertaken, to cut the financial support of the group. But ISIS' oil supplies have already resisted most of these efforts -- their operations are run in small-market, "cash-and-carry" arrangements, using pickup trucks and oil barrels. There is not much of a centralized marketplace or infrastructure to target. When one nexus point of delivery is shut down, three more pop up in its place. As with much of the history of Middle East oil, it is practically impossible to stop the flow of petrodollars.
And ISIS control of oil is extremely limited, perhaps as little as 30,000 barrels a day, not a significant amount to global production. Most of it remains to be locally used, although some refined barrels slip into Turkey and Lebanon. And it is in refining that ISIS really makes most of its revenue -- but mostly these are mobile units that are difficult to attack.
Despite a strong effort to shut this important source of revenue already, it is now widely acknowledged that completely stopping the flow of oil in Syria is impossible.
Nor does it seem likely that new military action against ISIS will have a geopolitical effect on oil elsewhere in the region. Iran and Russia are not about to abandon their production plans for the coming year; neither are the Saudis.
One possible effect on oil could be the simple decline in growth projections in Europe and elsewhere, as people refrain out of fear or restrictions from travel and entertainment. This idea, I think, is taking its toll today on the oil markets, as the price of oil again nears $40 a barrel. But in the long term, that is unlikely to have a significant effect either. Since 9/11, the 2004 Spanish train attack, the London 2005 bombings, the Charlie Hebdo massacre and the thwarted Paris train attack in August, there has been an increasing, if unfortunate realization that Islamic fundamentalist terrorism -- whether from Al-Qaeda, ISIS or other splinter groups -- is a lasting threat.
Today's dropping oil prices are being coerced by the Paris attacks, but seem to me more related to the downwards momentum of still-increasing stockpiles and lowered demand forecasts.
However, commercial selling of oil, despite the still-increasing surplus, will, I believe, cease again as oil nears this $40 handle, just as it did the last time it approached this level in late August. Despite the economic pall that has been cast over the markets because of the Paris attacks, I still believe that oil finds its boundaries between $40 and $50 for a while yet to come.
We cannot ignore the horrific acts of ISIS in Paris -- but I believe that the oil markets mostly will.
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WASHINGTON — Saudi Arabia has been trying to pressure President Vladimir V. Putin of Russia to abandon his support for President Bashar al-Assad of Syria, using its dominance of the global oil markets at a time when the Russian government is reeling from the effects of plummeting oil prices.
Saudi Arabia and Russia have had numerous discussions over the past several months that have yet to produce a significant breakthrough, according to American and Saudi officials. It is unclear how explicitly Saudi officials have linked oil to the issue of Syria during the talks, but Saudi officials say — and they have told the United States — that they think they have some leverage over Mr. Putin because of their ability to reduce the supply of oil and possibly drive up prices.
“If oil can serve to bring peace in Syria, I don’t see how Saudi Arabia would back away from trying to reach a deal,” a Saudi diplomat said. An array of diplomatic, intelligence and political officials from the United States and the Middle East spoke on the condition of anonymity to adhere to protocols of diplomacy.
Any weakening of Russian support for Mr. Assad could be one of the first signs that the recent tumult in the oil market is having an impact on global statecraft. Saudi officials have said publicly that the price of oil reflects only global supply and demand, and they have insisted that Saudi Arabia will not let geopolitics drive its economic agenda. But they believe that there could be ancillary diplomatic benefits to the country’s current strategy of allowing oil prices to stay low — including a chance to negotiate an exit for Mr. Assad.
Mr. Putin, however, has frequently demonstrated that he would rather accept economic hardship than buckle to outside pressures to change his policies. Sanctions imposed by the United States and European countries have not prompted Moscow to end its military involvement in Ukraine, and Mr. Putin has remained steadfast in his support for Mr. Assad, whom he sees as a bulwark in a region made increasingly volatile by Islamic extremism.
Syria was a major topic for a Saudi delegation that went to Moscow in November, according to an Obama administration official, who said that there had been a steady dialogue between the two countries over the past several months. It is unclear what effect the Jan. 23 death of King Abdullah of Saudi Arabia might have on these discussions, which the Saudis have conducted in secret.
Russia has been one of the Syrian president’s most steadfast supporters, selling military equipment to the government for years to bolster Mr. Assad’s forces in their battle against rebel groups, including the Islamic State, and supplying everything from spare parts and specialty fuels to sniper training and helicopter maintenance.
With a fifth of the world’s oil reserves, Saudi Arabia is the leading player in OPEC and has great sway over any move by the cartel to raise prices by cutting production. Its refusal to support such steps despite dizzying price declines has prompted myriad theories about the Saudi royal family’s agenda, and Saudi officials have hinted that the country is happy to let the low prices punish rival producers who use more expensive shale-fracking techniques.
“They have almost total leverage,” said Senator Angus King, independent of Maine, who recently returned from a trip to Saudi Arabia.
“They have more breathing room than these other countries,” he said. “It’s like the difference between someone having a million dollars in the bank and someone who is living paycheck to paycheck.”
The drop in oil prices has been felt in Saudi Arabia, but the country’s vast oil reserves and accumulated wealth give it a far greater cushion than other oil-producing nations have. Saudi Arabia needs the price of oil to be over $100 a barrel to cover its federal spending, including a lavish budget for infrastructure projects. The current price is about $55 a barrel, and Saudi Arabia has projected a 2015 deficit of about $39 billion.
But the monarchy has about $733 billion in savings invested in low-risk assets abroad, and it can afford to dip into that for a few years without much pain. Russia and Iran have no such luxury, and neither do shale-fracking oil producers in North America.
The Saudis have offered economic enticements to Russian leaders in return for concessions on regional issues like Syria before, but never with oil prices so low. It is unclear what effect, if any, the discussions are having. While the United States would support initiatives to end Russian backing for Mr. Assad, any success by the Saudis to cut production and raise global oil prices could hurt many parts of the American economy.
After the meeting in Moscow in November between Prince Saud al-Faisal, the Saudi foreign minister, and Sergey V. Lavrov, the Russian foreign minister, Mr. Lavrov rejected the idea that international politics should play a role in setting oil prices.
“We see eye to eye with our Saudi colleagues in that we believe the oil market should be based on the balance of supply and demand,” Mr. Lavrov said, “and that it should be free of any attempts to influence it for political or geopolitical purposes.”
Russia is feeling financial pain and diplomatic isolation because of international sanctions stemming from its incursion into Crimea and eastern Ukraine, American officials said. But Mr. Putin still wants to be viewed as a pivotal player in the Middle East. The Russians hosted a conference last week in Moscow between the Assad government and some of Syria’s opposition groups, though few analysts believe the talks will amount to much, especially since many of the opposition groups boycotted them. Some Russia experts expressed skepticism that Mr. Putin would be amenable to any deal that involved removing support for Mr. Assad.
“It would be a huge change, and to me, this is an unlikely scenario,” said Angela E. Stent, a Russia specialist at Georgetown’s School of Foreign Service and a former senior national intelligence officer who focused on Russia.
Saudi Arabia’s leverage depends on how seriously Moscow views its declining oil revenue. “If they are hurting so bad that they need the oil deal right away, the Saudis are in a good position to make them pay a geopolitical price as well,” said F. Gregory Gause III, a Middle East specialist at Texas A&M’s Bush School of Government and Public Service.
For his part, Mr. Assad has shown no inclination to step aside. He said in a recent interview with Foreign Affairs magazine that the true threat in Syria came from the Islamic State and Qaeda-affiliated groups that, in his words, make up a “majority” of the rebellion.
American and Arab officials said that even if Russia were to abandon Mr. Assad, the Syrian president would still have his most generous benefactor, Iran. Iranian aid to the Syrian government has been one of the principal reasons that Mr. Assad has been able to hold power as other autocrats in the Middle East have been deposed.
And as a major oil producer, Iran would benefit if Saudi Arabia helped push up oil prices as part of a bargain with Russia.
“You are going to strengthen your enemy whether you like it or not, and the Iranians are not showing any flexibility here,” said Mustafa Alani, an analyst at the Gulf Research Center who is close to the Saudi royal family.
But the military aid that Russia provides to Syria is different enough from what Damascus receives from Iran, its other major supplier, that if “Russia withdrew all military support, I don’t think the Syrian Army could function,” a senior Obama administration official said.
A number of Arab nations have been pushing for the Saudis and Russians — polar extremes in their positions toward Mr. Assad — to find common ground on the matter as a step toward ending the carnage of Syria’s civil war, now almost four years old.
But, as one Arab diplomat put it, “This decision is ultimately in Putin’s hands.”
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Price of oil - Wikipedia, the free encyclopedia
<a href="https://en.wikipedia.org/wiki/" rel="nofollow">https://en.wikipedia.org/wiki/</a>Price_of_oil
Jump to 2014–2015 global oversupply - [edit]. By 12 December 2014, the price of benchmark crude oil, both Brent and WTI reached their lowest prices ...
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The Obama administration is turning down a plea from the company behind the Keystone XL oil pipeline to pause its review of the project.
The refusal means that President Obama will make a decision on the pipeline before leaving office in January 2017, and he will not leave it up to his successor.
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“We’ve told TransCanada that the review process will continue,” State Department spokesman John Kirby told reporters Wednesday, the day that the agency formally wrote to TransCanada Corp. about the rejection.
“There’s no legal requirement to do that and a lot of interagency work has gone into this to date, to include interagency review and coordination, as well as significant review and coordination here,” Kirby said. “The secretary believes that it’s most appropriate to keep that process in place.”
TransCanada spokesman Mark Cooper said the company respects State’s decision, and it will continue to advocate for Keystone to administration officials.
TransCanada petitioned Monday for State to hold off on its review process, which has taken seven years so far, angering the company and its supporters, including congressional Republicans.
The developer said it wanted to wait until Nebraska regulators finished considering the pipeline’s route, a process that would have almost certainly pushed the federal decision into the next president’s term — a potential win for TransCanada if a Republican is elected.
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White House press secretary Josh Earnest called the request “unusual” Tuesday and said that Obama would make a decision by the end of his term.
TransCanada head Russ Girling said the request had nothing to do with politics.
“We’ve tried to stay out of the politics of this situation and focus on the things that we’re capable of doing and can control and that’s the regulatory process,” he said in a Tuesday call with investors.
All Republican candidates for the 2016 presidential election have pledged to approve the Canada-to-Texas oil pipeline, and all Democrats oppose it.
Keystone requires a presidential permit because it would cross an international border.
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Suggestions that oil prices will remain at their current levels will "turn out to have been wrong", according to Saudi vice oil minister Prince Abdulaziz bin Salman Al Saud.
Brent crude oil prices have fallen 43% to $48 per barrel in the last 12 months as Saudi Arabia led the Organisation of Petroleum Exporting Countries (OPEC) in continuing to pump despite a slowdown in global demand.
Demand has slowed as a result of the stalling Chinese economy together with the abundance of oil alternatives such as shale gas.
However, Prince Abdulaziz, speaking at an energy forum meeting in Qatar, played down concerns.
He said: "Despite all the macroeconomic uncertainties engulfing the global economy, oil demand continues to grow at a robust pace and is set to increase by 1.5 million barrels per day (b/d) in 2015, the strongest growth seen in the past few years."
In 2015, oil consumption is estimated to reach 94 million b/d, and the Saudis are confident this will increase.
He said: "Globalisation, industrialisation, urbanisation and rapid development – all fuelled by energy – will continue to lift hundreds of millions of people out of poverty and to expand the size of the middle class from the current level of 1.8 billion to 3.2 billion in 2020, and to 4.9 billion in 2030, with the bulk of this expansion occurring in Asia.
"The new emerging middle class will be made up of people who are younger, and eager to increase their consumption.
"Such young demographics amidst rising income levels will keep energy demand on an upward trend."
Normality is also likely to return to the supply-side of the oil equation, with Prince Abdulaziz saying that "$200bn of investments in energy have been cancelled this year".
Prince Abdulaziz also dismissed theories about "scarcity" in oil production, saying: "The peak oil theories that dominated the energy discourse few years ago - insisting that global oil production had already reached a peak - have proved to be simply wrong.
"The pendulum has now moved in the opposite direction, and expectations of 'scarcity' have been replaced with expectations of 'abundance'."
The IEA (International Energy Agency) has echoed the Saudi sentiment in its annual assessment of the energy market saying that the collapse in oil prices risks undermining efforts to reduce the pollution blamed for global warming, a topic at the top of the COP climate change conference in Paris later this month.
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Iran will double natural gas exports to Iraq starting in 2017 under a contract signed on November 11.
The deal, to send 20 to 35 million cubic meters of gas per day to the southern Iraqi city of Basra, follows a first major contract between the countries in 2013 to export gas to Baghdad.
Iran's Deputy Oil Minister Hamid Reza Araghi, who, along with Iraq's deputy energy minister signed the deal, said the six-year contract will require the building of new pipelines and other facilities.
"The pricing will be similar to that of the Baghdad contract," he said.
The Baghdad contract to export 25 million cubic meters of gas a day was reportedly was worth $3.7 billion (3.4 billion euros) a year.
Iran sits on the world's second largest natural gas reserves and produces some 600 million cubic meters a day. It currently consumes almost all of the gas domestically as it lacks infrastructure and markets for exports.
Based on reporting by AFP and TASS
Competition is growing in Russia’s biggest oil market. While Saudi Arabia’s encroachment in Europe is getting all the attention, the greatest threat comes from another part of the Middle East -- Iran.
Saudi Arabia has started shipping crude to traditional Russian markets like Poland and Sweden, but supplies to Europe from the world’s largest exporter won’t increase by enough to reduce prices, said Texas-based consultant Stratfor. In contrast, a surge in Iranian exports after the lifting of sanctions could erode the value of Russian shipments to the region as soon as next year, according to KBC Advanced Technologies.
Tougher competition in Europe, the destination for almost 70 percent of Russia’s oil exports, comes as the country is already battling recession. Oil and gas sales account for about half of government revenues and the commodity-price slump has amplified the economic blow from international sanctions over Ukraine. An increase in Iranian exports following a nuclear deal with world powers could make matters worse.
“Eastern European refineries are geared to process Russian crude, the Urals blend, and the closest sort to it would be Iranian oil,” Michael Nayebi-Oskoui, senior energy analyst for Middle East and South Asia at Stratfor, said by phone. For Saudi shipments to push prices down, “they would have to be significantly rerouted from Asia towards Europe, and we don’t see that happening,” he said.
Before Sanctions
Iranian shipments to Europe came to about 600,000 barrels a day, or 17 percent of its production, before sanctions blocked imports in 2012. Once restrictions are lifted, Oil Minister Bijan Namdar Zanganeh has said the National Iranian Oil Co.’s priority will be to regain its “lost share” of the market, regardless of the impact on crude prices.
“Iran is going to be looking at marketing fairly aggressively,” David Fyfe, head of market research and analysis at oil trader Gunvor Group Ltd., said by phone from Geneva. “They want to reclaim the foothold they previously had.”
Former customers in southern Europe already have shown an interest in resuming purchases of Iranian oil. Hellenic Petroleum SA is “in the process of initiating a dialogue” with Iran’s national oil company, as are “most western companies,” Vasilis Tsaitas, a company spokesman, said by e-mail. Hellenic operates three of the five refineries in Greece with total capacity of 341,000 barrels a day, according to its website.
Iranian Alternative
“Iranian crudes will definitively be again another alternative to consider” if sanctions are lifted, Ignacio Rodriguez-Solano, a spokesman for Cia Espanola de Petroleos SAU, said by e-mail. The company runs three Spanish refineries with a total capacity of around 520,000 barrels a day.
Shipments from Iran used to account for as much as 30 percent of Hellenic’s crude needs and as much as 15 percent at CEPSA and were partly replaced by Russian exports after sanctions were imposed, according to the companies.
The restoration of Iran’s supplies to Europe would pressure the price of Urals crude, Russia’s main export grade, said Ehsan Ul-Haq, a senior analyst at consultant KBC. In the Mediterranean, the discount of Urals to regional benchmark Dated Brent could drop to $1.50 a barrel next year from an average of 80 cents so far in 2015, costing Russia about $420,000 a day in lost earnings, he said.
Brent crude was $1.09 lower at $44.75 a barrel at 2:34 p.m. on the London-based ICE Futures Europe exchange.
Wider Impact
While the loss of earnings in southern Europe would reach only about $153 million, or about 0.4 percent of Russia’s projected oil and gas export revenues for the year, the price impact could eventually spread to other markets including northwest Europe, meaning final losses “could be much more,” Ul-Haq said.
Inflows of Iranian crude after sanctions are lifted are unlikely to significantly change the situation in the European market, Russia’s Energy Minister Alexander Novak told reporters on the sidelines of a Russian-Iranian intergovernmental commission in Moscow. "Iran used to be present in the market; when Iran is back, nothing extraordinary is going to happen," he said.
Following Saudi Arabia’s entry into Poland, Igor Sechin, chief executive officer of Russia’s largest oil producer Rosneft OJSC, accused it at a conference in Moscow last month of “actively dumping” crude in traditional Russian markets. The Bank of Russia in its economic overview published on Thursday said Saudi crude supplies to Europe may be the reason behind a widening Urals discount to Brent in northwest Europe, posing “additional risks for the Russian exports, payment balance, and above all -- for the Russian budget.”
Yet while the Middle East’s largest producer may be preparing for greater competition in Europe, it shows few signs of planning a major expansion. Shipments of the kingdom’s medium, light and extra-light crude grades to Europe totaled 780,000 barrels a day in July, little changed from the second-quarter average, according to data from the International Energy Agency. Russia shipped more than twice as much Urals to the region that month, the data show.
Saudi Arabia’s interest in expanding in Europe will probably remain limited because Asia still offers better prices and easier shipping, said Ul-Haq.
Iran’s plan to increase production to the pre-sanctions levels means “it will have to seek additional markets, including those traditionally supplied by Russia,” Mehdi Varzi, a former Iranian diplomat and director of Varzi Energy Ltd. consultancy, said by e-mail.
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The strategy of Saudis succeeded in transforming the trends and a climate of the global oil market. At the end of the week the oil prices were going down amid solid USD, which has restored hope for hiking interest rates by the Federal Reserve this December. WTI fell to $40, Brent – to $44 per barrel. However, in the long perspective, Saudi Arabia will gain an advantage, because the kingdom uses every chance to get a new share of the market, spreading cheap oil all over the globe. The oil princes just “make the market an offer it can't refuse”. But another type of oil is going to flood the market soon, the Iranian one.
Four crucial factors rule the current trend in the oil markets.
1) OPEK and Saudis conquer East-Central Europe. Former pro-communist states turned away from Russian oil to the petrol from the kingdom. Poland was proud to declare its “undermining Russia’s traditional dominance as Poland’s crude supplier,” PKN Orlen SA CEO Jacek Krawiec explained. Some other countries of the region are feeling keenly to weaken ties with Russian companies. Thus East-Central Europe share of the oil market is shifting to the Middle East supplies. Nevertheless, the battle between Russians and Saudis for the market is not over yet. In July 2015 Saudis have shipped to Europe 780,000 barrels a day, Russia has shipped more than twice; already in October Rosneft CEO Igor Sechin complained about “untrustworthy Saudis”. The price for contracts is still a subject to negotiate.
2) Russians are fighting hard for their markets. Russia always behaves herself like a profit-from-crude-oil-addicted. Every petrodollar is to be counted in the state shoestring budget, do not even mention the “petroprofit” of Russian powers that be. For Russian as well as for Saudis, Asian markets matters more, than European ones, but ex-Soviets used to consider East-Central Europe as their barony forever. Putin again has appeared in the focus of the media after he had interfered the Syrian conflict in the interest of the president Assad. The consequences for Russia showed up almost immediately: (a) Saudis intensified their intrusion in the European oil market; (b) ISIS blew up the jet, killing 224 Russian people. In response Russians is strengthening an alliance with Iranians they have made almost two years ago. From now on the purpose of the alliance is to enlarge collaboration in fighting ISIS, trading weapons and also in surviving on the oil markets. In April 2015 Moscow has confirmed oil-for-good swaps with Tehran, in early November the states signed up the agreement to supply C-300 anti-aircraft missile system to Iran. The unpredictable leaders shook hands. Looks like Moscow believes that Iran will take into consideration Russian interests on commodity markets. Russia shows no intention to decline oil production and supply. Extremely dangerous peculiarities characterize the leadership of the country: uncertain, aggressive, armed cap-a-pie, coward and narrow-minded.
3) Iran prepares to get its markets back with no merci. The south of Europe waits for Iranian oil. Hellenic Petroleum SA is working out a plan to initiate a dialogue with Iran’s national oil company. According to the company’s capacity, Iranian Oil Minister Bijan Namdar Zanganeh will get a possibility to sell 341,000 barrels a day to Greece. Cia Espanola de Petroleos SAU champs at the bit until the lifting of the anti-Iranian sanctions. Iranians are aware of another potential bargain for520,000 barrels a day. Certainly, Iran will be back on the market, because Bijan Zanganeh promised to trade the oil almost for a song. The Iran impacts the market as a powerful Machiavellian vizier, armed with western technologies in couple with eastern craftiness.
4) U.S. high tech oil reacts at the market following the strategy of its own. The US crude inventories keep the highest level for the 80 years, while the rigs have been idled and continue to be closed every week this autumn. The White House rejected the joint project to build a gigantic tube Keystone XL from Canadian Alberta to Texas. Oil terminals and refineries in Cushing are satisfied with the volume and have no interest to gulp more. So U.S. producers do not purpose to change its share of the market or to collaborate with the closest neighbor. They will survive $20 a barrel, if needed. America earned a lot thanks to high technology, however high tech in the oil industry costs a lot. Therefore, meanwhile Washington preferred to pay for cheap oil in dollars, than to spend money and gut bowels of the earth of their own. They are out of the battle in white clothes holding the purse strings.
Thus we will witness an interaction of the factors soon.
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Oil prices have already taken a dramatic fall that's saved consumers big time at the pump. Last week, crude tumbled below $42 a barrel, down from $100 last year.
One big-name investor is predicting an even sharper drop.
"There is no evidence whatsoever to suggest we have bottomed. You could have $15 or $20 oil -- easily," influential money manager David Kotok told CNNMoney.
A further decline to $15 a barrel would be huge. Oil hasn't traded that low since early 1999, when gasoline at the pump was selling for under $1 a gallon.
Kotok's views on the economy and financial markets are closely watched. The 72-year-old co-founder of Cumberland Advisors manages more than $2 billion in assets and hosts an annual invite-only fishing trip that doubles as an economic summit. Known as "Camp Kotok," the event lures leaders in finance to Maine each summer.
"I'm an old goat. I remember when oil was $3 a barrel," said Kotok, whose clients include former New Jersey Governor Thomas Kean.
Oil's supply glut could worsen
Oil prices have already suffered a stunning decline. They're down nearly 60% and trading at levels unseen since early 2009. It's been a blessing to American drivers. The average price of gasoline is now $2.66 a gallon, down from $3.45 a year ago, according to AAA.
The big problem is the world still has more oil than it needs, especially given China's economic slowdown. The American energy boom that began last decade created a supply glut. OPEC, led by Saudi Arabia, has been unwilling to balance the market by cutting production.
The oversupply problem may very well be amplified by the Iran nuclear deal. If the historic agreement goes forward, sanctions relief will allow Iran to drastically increase output. That could trigger a reaction from the Saudis, Iran's longtime rival in the region.
"The Saudis' best weapon is the lowest oil price at maximum volume. They have enough financial reserves to have staying power for years," Kotok.
On the other hand, Iran has far less financial flexibility and it needs higher prices to turn a profit.
"With a low price, the Saudis are denying their enemy across the Persian Gulf money. That's an oil war," Kotok argued.
Some grades of crude oil are already around $20
Oil at $15 may sound crazy, but some grades of crude are already nearing those levels. For example, Western Canadian crude, a heavier type of crude that is more difficult to refine, is currently trading in the $20 range.
If history is any guide, seasonal forces may also start to pressure oil prices. The end of summer driving season tends to weaken energy demand, dragging prices lower.
All of this is why Kotok is warning investors to stay far, far away from oil stocks.
Unlike hedge fund giants David Einhorn and Carl Icahn, Kotok has been "max underweight" energy stocks since oil was sitting at $100 a barrel. That's been a smart play. The XLE Energy Select SPDR ETF (XLE) has lost over a quarter of its value over the past year.
"There is an entry time coming in the energy patch, no question. In our view, it isn't here yet," Kotok said.
CNNMoney (New York) August 18, 2015: 2:43 PM ET
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MOSCOW, November 3. /TASS/. Oil prices may stay at low levels in foreseeable future, Russian Central Bank Chief Elvira Nabiullina said on Tuesday.
"The oil market is being structurally transformed, which demonstrates that oil prices may stay low for a long period of time. Many are saying about the end of commodity super-cycle," Nabiullina said.
Earlier Russia’s Economic Development Minister Alexey Ulyukayev said according to the ministry’s conservative forecast for 2016 oil price will stand at $40. First Deputy Chairman Dmitry Tulin said the regulator implies oil price significantly below $40 per barrel in its pessimistic forecast.
Deputy Chairman and chief economist of Russia’s VEB development bank and former Deputy Economic Development Minister Andrei Klepach believes that next year the price of oil is likely to increase, rather than decrease. "I think it is unlikely [oil price at $40 per barrel or below — TASS]. One can imagine anything, but it is more likely that the price will grow, not crumble, to $55-60 per barrel next year and more," he said, adding that if the price of oil is at $40 at least for one year, the economy would be in shock.
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