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How do ex-Saudi Aramco geologist Dr Husseini’s oil price spike predictions of USD 140 by 2016-17 stack up?

In an interview with ASPO USA in January 2014 Ex-Saudi Aramco geologist Dr. Sadad-Al-Husseini predicted oil price spikes of $140 by 2016/17. This post shows some graphs explaining why this could happen. Husseini:  My base oil price forecast in 2012 dollars still ranges between $105 and $120/barrel Brent with a volatility floor of $ 95/barrel and more probable upward spiking to $140/barrel within 2016/2017. Husseini did not elaborate how he arrived at that time frame but this question and answer give us a hint:   ASPO:  “In the larger context, how has your view of future world oil production supply evolved over the last four or five years? As a benchmark, I reference your slides from the 2009 Oil & Money Conference slides”   Husseini:  “The realities of the 2009 O&M forecast of a limited plateau of oil supplies have been pretty much vindicated since then. The oil plateau […]

Posted On : Published By : Tom Whipple
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Psychological Trigger Points For Crude Oil Demand Destruction

<img src="http://s7.addthis.com/static/btn/sm-share-en.gif" width="83" height="16" alt="Bookmark and Share" style="border:0"/> <img src="http://2.bp.blogspot.com/-hlL_Ax0fcZg/Uyh9250OnmI/AAAAAAAACCI/q2_QhL5AOjI/s1600/WhatWePay_p2.png" title="Psychological Trigger Points For Crude Oil Demand Destruction" alt="Psychological Trigger Points For Crude Oil Demand Destruction thumbnail" align="right" border="0" style="padding: 0px; margin: 5px 0px 10px 15px; width: 226px; height: 170px;"/> I’ve talked about demand destruction before in this blog. Demand destruction occurs when the marginal benefit of using more crude oil exceeds the marginal cost for people. Essentially, when oil prices go too high, people use less oil. On a personal level, this means that people may drive fewer miles by staying closer to home on the weekends, they might postpone a long-distance vacation, or they might start taking the bus or work from home instead of commuting by car. wrote a nice article on this phenomenon last year where they stated “in the rich world oil demand has already peaked: it has fallen since 2005.” While demand destruction […]

Posted On : Published By : Tom Whipple
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Oil Futures Mixed; Inventory Data, Fed Meeting in Focus

Crude-oil futures were mixed in Asian trading hours Tuesday as markets await weekly data on U.S. oil inventories and the outcome of the Federal Reserve meeting later this week. On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at $97.99 a barrel at 0607 GMT, down $0.09 in the Globex electronic session. May Brent crude on London’s ICE Futures exchange rose $0.30 to $106.54 a barrel. Oil prices dropped sharply overnight as the Ukraine crisis eased temporarily after Western sanctions on Russia were limited to specific individuals and officials. The situation could however escalate if Russia tries to encroach further into majority ethnic Russian territory in eastern Ukraine, prompting more severe economic sanctions. "The key point for the oil markets is that, in sharp contrast to Iran, Europe and Russia have a gun to each other’s head which should prevent either side from […]

Posted On : Published By : Tom Whipple
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Oil Futures Decline as Sanctions Leave Energy Exports Alone

–U.S., EU sanctions target Russian and Ukrainian officials –Russian oil and natural-gas exports unaffected by sanctions –April Nymex crude falls 0.8% to $98.08/barrel By Nicole Friedman NEW YORK–Oil futures slid Monday on expectations that Western sanctions in response to rising tensions between Russia and Ukraine are unlikely to affect oil and natural-gas supplies. Light, sweet crude for April delivery settled down 81 cents, or 0.8%, at $98.08 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange fell $1.97, or 1.8%, to $106.24 a barrel, its lowest settlement price since Feb. 4. The U.S. and European Union enacted sanctions against Russian and Ukrainian officials Monday in response to Moscow’s military intervention in Crimea. The U.S. sanctions prohibit Americans from conducting business with seven Russian officials and four Ukrainians. The EU imposed asset freezes and travel bans on 13 Russians and eight leaders from Ukraine’s […]

Posted On : Published By : Tom Whipple
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Natural Gas Advances Ahead of Continued Wintry Weather

–Colder-than-average weather to sweep central and eastern U.S. in next 6-10 days –April futures rise 2.5% to $4.536/mmBtu –Storage withdrawals expected to continue through first week of April By Nicole Friedman NEW YORK–Natural gas climbed Monday on outlooks for continued frigid weather through the end of the month, which is expected to keep demand robust for the heating fuel. Natural gas for April delivery settled up 11.1 cents, or 2.5%, at $4.536 a million British thermal units on the New York Mercantile Exchange. Colder-than-average weather has boosted demand for natural gas to record levels this winter, and revised forecasts Monday indicated that wintry temperatures are set to persist in the next two weeks. "Another impressive cold air mass" is projected to spread across the eastern two-thirds of the U.S. in the next six to 10 days, according to Andover, Mass.-based forecaster WSI Corp. On the East Coast, cities from […]

Posted On : Published By : Tom Whipple
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Deterioration in U.S.-Russian Relations May Disrupt Coming Talks With Iran

Tensions between the West and Russia over events in Ukraine have cast a shadow over the second round of talks set to begin on Tuesday in Vienna on a permanent nuclear agreement with Iran. Although the talks have no direct connection to Ukraine, their success hinges on solidarity among the so-called P5-plus-one countries — the five permanent members of the United Nations Security Council, which include Russia, plus Germany — in favor of a tough agreement with Iran to drastically scale back its nuclear program. If Russia signals that its cooperation with the West has weakened, that will reduce pressure on Iran to make concessions, said experts knowledgeable about the talks, which began last month with three days of meetings involving senior diplomats from each of the governments involved.

Posted On : Published By : Tom Whipple
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Iran Talks Resume Amid Ukraine Crisis

Iran and six major powers begin a fresh round of high-level nuclear talks in Vienna on Tuesday morning, with negotiators aiming to narrow gaps on a host of issues as the two sides seek a final, comprehensive agreement by mid-July. The talks, which aim to settle international concerns about Tehran’s nuclear activities in exchange for lifting the tight web of sanctions on Iran, are the first since tensions erupted within the six-power group over Ukraine. The European Union and U.S. imposed sanctions Monday on more than a dozen Russian officials as Moscow appeared set to recognize the independence of Ukraine’s Russian-speaking Crimea region. Iran, which has repeatedly said its nuclear activities are for purely peaceful purposes, is in talks with Russia, the U.S., France, Germany, the U.K. and China over its nuclear activities. U.S. and European officials say they hope the Ukraine crisis won’t complicate the Iran nuclear […]

Posted On : Published By : Tom Whipple
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China Could Lose Deal in Iran's South Pars Gas Field

China could lose a $4.7 billion contract to develop Iran’s giant South Pars gas field if delays on the project persist, an Iranian deputy oil minister said. The warning comes as Iran’s oil minister, Bijan Zanganeh, has vowed to shake up the country’s largest industry, which has suffered years of decline thanks to mismanagement and the effect of international sanctions. State-owned China National Petroleum Corp. was awarded a $4.7 billion project in South Pars in 2009, after international pressure forced France’s SA to pull out. The South Pars field is the largest gas reservoir in the world not mixed with oil. But in an interview with The Wall Street Journal, Mansour Moazami, Iran’s deputy oil minister for planning, said there had been "many, many, many delays for the contract in South Pars." "We are giving a first warning, a second warning. Maybe in the end, we will terminate the […]

Posted On : Published By : Tom Whipple
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China Could Lose Deal in Iran’s South Pars Gas Field

China could lose a $4.7 billion contract to develop Iran’s giant South Pars gas field if delays on the project persist, an Iranian deputy oil minister said. The warning comes as Iran’s oil minister, Bijan Zanganeh, has vowed to shake up the country’s largest industry, which has suffered years of decline thanks to mismanagement and the effect of international sanctions. State-owned China National Petroleum Corp. was awarded a $4.7 billion project in South Pars in 2009, after international pressure forced France’s SA to pull out. The South Pars field is the largest gas reservoir in the world not mixed with oil. But in an interview with The Wall Street Journal, Mansour Moazami, Iran’s deputy oil minister for planning, said there had been "many, many, many delays for the contract in South Pars." "We are giving a first warning, a second warning. Maybe in the end, we will terminate the […]

Posted On : Published By : Tom Whipple
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New Kurdish oil online for DNO International

Norwegian energy company DNO International said Monday it started producing oil from new wells in the Tawke field in the Kurdish region of Iraq. DNO said Tawke-21 and Tawke-22 were producing oil at a combined rate of 37,000 barrels per day. Executive Chairman Bijan Mossavar-Rahmani said in a statement production from the Tawke field was close to what the company can deliver through existing pipeline infrastructure and by road. "With the exceptional results from these latest wells … we are on track to meet our ambitious deliverability goal of 200,000 barrels per day in 2014," he said Monday. Genel Energy, led by former BP boss Tony Hayward , said in January an energy agreement between the semiautonomous Kurdistan Regional Government and Turkey, coupled with the completion of new pipeline infrastructure, should lead to a rise in oil exports from oil fields in the Kurdish region. Kurdish oil issues are […]

Posted On : Published By : Tom Whipple