Linking the gas prices thread

I keep referencing Arctic production because it helps people understand that the cost of transporting oil, is a HUGE part of oil’s price.

Good or bad, transportation costs do not diminish with oil’s depletion.

It is a habit I developed on some Malthusian thread about peak oil.

Oil prices are definitely on the move up this week.

Numerous things in play.

Drawdowns from US reserves were heavier than expected on strong US exports. Production in states like Canada, Venezuela, Libya, and Kazakhstan are down, some of them unexpectedly (Canada had technical issues, a blown transformer at a syncrude facility that cut 350K barrels a day).

The thing that seems to have everybody freaking out though is the US threats to its allies to be shut out of the US banking system if they purchase Iranian oil after November 4th. That’s two million barrels a day that will have to be replaced.

OPEC just pledged to increase production by a million barrels a day, most analysts seem to think that will be more like 700K barrels/day increase.

Don’t be surprised if oil goes nuts this summer, and yeah I know, I’ve been saying oil prices aren’t going to skyrocket without an unforeseen oil shock. Well, the Trump administrations zero tolerance sanction against Iran is looking like it’s going to be that oil shock. I’d expect a release from the SPR before November depending on what oil prices do, but no US allies are expected to get waivers and their governments can’t protect anybody who buys Iranian oil and then has no place to sell it. Nobody is going to take a chance of being locked out of the US banking system.