Tag Archives: oil market

Russia Benefiting from Oil Market Turmoil, by Tom Luongo

Russia is dominating the international oil market. From Tom Luongo at tomluongo.me.com:

An interesting couple of posts from Southfront.org this week gives us some insight as to what’s happening in international oil markets.

Demand for Russian Urals grade oil is so strong that is has been trading at a pretty steep premium to Brent Crude this month. Southfront references this report from Argus research.

This means that the Russian Urals crude is trading at a premium to the European benchmark Brent. The premium is $1.55 per barrel in North-Western Europe and $2.55 – in the Mediterranean.

Argus names competition as the reason of Urals reaching such a high price. After the United States imposed sanctions against Venezuelan oil, American refineries began to willingly buy Russian heavy oil, very similar to the one exported by the Venezuelan PDVSA. In addition, demand for Russian oil in Asia is growing.

Traditionally, Urals trades at a discount to Brent because of a lack of a unified benchmark price for it. The July Shanghai Crude Oil futures contract closed at ¥299 (or $42.30) per barrel this week, putting it at a ~$1.70 premium to Brent Crude.

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Inside Story Of How Trump Got MbS To ‘Bend The Knee’: Cut Oil Supply Or Lose US Protection, by Tyler Durden

How behind-the-scenes global power politics works. From Tyler Durden at zerohedge.com:

The full story of President Trump’s intervening in the Russia-Saudi price war which sent oil prices plunging to historic lows has been revealed in a new explosive report. Trump’s pressure resulted in the surprise April 12 unprecedented OPEC+ production cut by 9.7 million barrels per day (bpd), which saw the Saudis and Russians begrudgingly agree to cut 2.5 bpd each.

Ourselves and others strongly suggested at the time that no doubt there were strong quid pro quo type ultimatums being delivered behind the scenes — consistent with Trump’s prior eyebrow raising boasts about Riyadh ponying up $1 billion in ‘protection money’ in return for defense against Iran — but new Reuters confirmation is out Thursday morning, and the details are more delicious than could have been expected, complete with the report actually describing of Saudi leaders that they genuinely panicked and fast began “bending the knee” when confronted by Trump’s slash output or else threat.

It began with an April 2nd phone call, Reuters details, wherein Trump pressed Saudi Crown Prince Mohammed bin Salman with the following ultimatum: OPEC must immediately begin cutting production or see all American troops withdrawn from the kingdom.

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Financial N-option will settle Trump’s oil war, by Pepe Escobar

If you want to take down the west, take down the derivatives market. At some number bigger than $1 quadrillion (one thousand trillions), it’s a sitting duck. From Pepe Escobar at thesaker.is:

On foreign soil, as a guest nation, US has assassinated a diplomatic envoy whose mission the US had requested

The bombshell facts were delivered by caretaker Iraqi Prime Minister Adil Abdul-Mahdi, during an extraordinary, historic parliamentary session in Baghdad on Sunday.

Maj. Gen. Qasem Soleimani had flown into Baghdad on a normal carrier flight, carrying a diplomatic passport. He had been sent by Tehran to deliver, in person, a reply to a message from Riyadh on de-escalation across the Middle East. Those negotiations had been requested by the Trump administration.

So Baghdad was officially mediating between Tehran and Riyadh, at the behest of Trump. And Soleimani was a messenger. Adil Abdul-Mahdi was supposed to meet Soleimani at 8:30 am, Baghdad time, last Friday. But a few hours before the appointed time, Soleimani died as the object of a targeted assassination at Baghdad airport.

Let that sink in – for the annals of 21st century diplomacy. Once again: it does not matter whether the assassination order was issued by President Trump, the US Deep State or the usual suspects – or  when. After all, the Pentagon had Soleimani on its sights for a long time, but always refused to go for the final hit, fearing devastating consequences.

Now, the fact is that the United States government – on foreign soil, as a guest nation – has assassinated a diplomatic envoy who was on an official mission that had been requested by the United States government itself.

Baghdad will formally denounce this behavior to the United Nations. However, it would be idle to expect UN outrage about the US killing of a diplomatic envoy. International law was dead even before 2003’s Shock and Awe.

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He Said That? 12/15/14

From a speech by Venezuelan President Nicolas Maduro this weekend:

There is no possibility of default, unless we would decide to not pay anymore as part of an economic strategy for development, and that’s not the strategy that has been constructed in these years of economic thought laid out by Hugo Chavez.

http://www.bloomberg.com/news/2014-12-15/venezuelan-bonds-fall-to-16-year-low-as-maduro-affirms-subsidies.html

It’s good to know that Venezuela will not default, unless it decides not to pay anymore “as part of an economic strategy development.” You can certainly hasten development, at least in the short term, by not paying your creditors. Markets are  skeptical of the Venezuelan government’s resolve. Its benchmark bonds, according to the article in Bloomberg, are trading at 37.835 cents on the dollar, and the pricing on credit default swaps implies a 97 percent chance of default in the next 12 months. Venezuela will be the first sovereign casuality of the oil price drop; the betting here is that it won’t be the last. Even at 37.835 cents on the dollar, anyone who wants to speculate on Venezuela’s bonds had better have strong nerves, infinite patience, and top-flight lawyers; sovereign defaults tend to get very messy.