Monday, September 23, 2019

Drama in the Oil Markets, But This Isn’t 2007 Anymore

by Wolf Richter, Wolf Street:

How the US shale boom changed the equation. If the attack on Saudi oil facilities had occurred in 2007, it would have caused chaos in the US economy.

The attacks on Saudi Arabia’s largest oil-processing plant at Abqaiq and its second-largest oil field in Khurais on Saturday knocked out about 5.7 million barrels a day of output – about half of Saudi production and about 5% of global production. Saudi military officials told reporters on Monday that the preliminary investigation of “debris and wreckage” shows “it belongs to the Iranian regime,” and that the long-range drones were not launched from Yemen, as Iran-backed Houthi rebels there had claimed.

Saudi Oilfield Attack: By Yemen, Iraq, or Iran? Israel? Production Back Up When?

by Mish Shedlock, The Maven:

Despite growing pressure from hawks to attack Iran, huge questions go unanswered.

From the North (Iraq or Iran) or the South (Yemen)?

Saudi, U.S. officials are investigating possibility that cruise missiles fired from Iraq or Iran hit the Saudi petroleum facilities.

What about Israel or Lebanon?

Satellite Images Reveal It Could Take “Months” to Fix Saudi Oil Facility

from The Anti Media:

And there it is, moments before oil markets open: upon the US release of declassified satellite images showing precision strikes on critical spheroids at the world’s largest oil processing facility at Abqaiq one market analyst alarmingly writes,

“We think this is a months fix, not days/weeks. Oil going up even higher.”

This after reports just before the satellite photos were released commonly said a minimum of “weeks” would pass before full Saudi Aramco production capacity comes back online.

“Drone Attack” on Saudi Oil – Who Benefits?

by Tony Cartalucci, New Eastern Outlook:

Huge blazes were reported at two oil facilities in Saudi Arabia owned by Aramco. While Saudi authorities refused to assign blame, media outlets like the BBC immediately began insinuating either Yemen’s Houthis or Iran were responsible.

The BBC in its article, “Saudi Arabia oil facilities ablaze after drone strikes,” would inject toward the top of its article:

Iran-aligned Houthi fighters in Yemen have been blamed for previous attacks.

Following an ambiguous and evidence-free description of the supposed attacks, the BBC even included an entire section titled, “Who could be behind the attacks?” dedicated to politically expedient speculation aimed ultimately at Tehran.

If You Think The Price Of Oil Is Skyrocketing Now, Just Wait Until The War Starts…

by Michael Snyder, The Economic Collapse Blog:

In the aftermath of the most dramatic attack on Saudi oil facilities that we have ever seen, the price of oil has exploded higher.  The Wall Street Journal is calling this attack “the Big One”, and President Trump appears to be indicating that some sort of military retaliation is coming.  Needless to say, a direct military strike on Iran could spark a major war in the Middle East, and that would be absolutely devastating for the entire global economy.  Just about everything that we buy has to be moved, and moving stuff takes energy.  When the price of oil gets really high, that tends to create inflation because the price of oil is a factor in virtually everything that we buy.  In addition, a really high price for oil also tends to slow down economic activity, and this is something that we witnessed just prior to the financial crisis of 2008.  And if this crisis in the Middle East stretches over an extended period of time, it could ultimately result in a phenomenon known as “stagflation” where we have rapidly rising prices and weaker economic activity simultaneously.  The last time we experienced such a thing was in the 1970s, and nobody really remembers the U.S. economy of the 1970s favorably.

IRAN-BACKED MILITANTS LAUNCH DRONE STRIKE ON SAUDI ARABIA’S ARAMCO REFINERIES WIPING OUT OVER HALF OF THE KINGDOM’S OIL REFINING CAPABILITIES

by Geoffrey Grinder, Now The End Begins:

Fires raged at the plant in Abqaiq, Bugayg, and the arab country’s second largest oilfield in Khurais this morning after mounting tensions between Riyadh and Tehran finally came to a head prompting Houthi rebels in Yemen to launch the flurry of rockets. A military spokesperson for these Yemeni rebels, who are locked into a bloody civil war, claimed responsibility for the strike on Saudi Arabia’s state-owned oil giant Aramco.

Saudi Arabia Shuts Down Half Its Oil Output After Drone Strikes

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from The Anti Media:

Yemen’s Houthi group early on Saturday attacked two plants at the heart of Saudi Arabia’s oil industry, including the world’s biggest petroleum processing facility, in strikes reported to have impacted close to half the kingdom’s oil output.

The pre-dawn drone attack on the Saudi Aramco facilities sparked several fires, although the kingdom, the world’s largest oil exporter, later said these were brought under control.

Three sources close to the matter told the Reuters news agency that oil production and exports have been affected.

Could Be “Weeks” Before Aramco Restores Full Production Capacity As Specter Of $100 Oil Looms

from ZeroHedge:

With the Saudis now racing to restore full oil production to normal levels as one Sunday morning headline noted, the industry is bracing for a potential significant delay in production — given rumors the fires at the facilities struck in the early hours of Saturday may not be fully “under control” as the kingdom was quick to assure hours after the raging explosions — which could translate into oil prices being very high for a long time. Industry sources said it could take weeks to return full production levels to normal.

U.S. Shale Oil In Trouble As Production Stalls After Two Years Of Significant Growth

by Steve St. Angelo, SRSRocco Report:

Has U.S. shale oil production stalled?  Well, it seems so.  After experiencing significant growth in 2017 and 2018, U.S. shale production in the first five months of this year has remained flat.  This is terrible news for the shale industry which has counted on production growth to increase cash flows so it can pay down debt.

And, along with not being able to increase production in the first five months of the year, the shale industry continues to receive an onslaught of negative press as recent articles reveal the disaster beginning to take shape. For example, here are a few articles indicating BIG TROUBLE ahead for the U.S. Shale Oil Industry:

‘Peak Oil’ Turns out to Be Complete Nonsense – Affordable Global Reserves Seem Virtually Limitless

from Russia Insider:

Back during the early days of the Bush-Cheney administration, countless articles and even official statements by the International Energy Agency and various governments proclaimed the onset of what was termed Peak Oil. This was a time when former Halliburton CEO, Vice President Dick Cheney, was named to head the White House Energy Task Force. In the run up to the March 2003 war on Iraq, peak oil or absolute decline in world oil reserves seemed a plausible explanation, if not justification, for the G.W. Bush invasion of Iraq. This author was also for a time persuaded that could explain the oil war. Yet, today we hear little about peak oil. Why, is interesting.

The New American Oil Empire Built on Sand

by F. William Engdahl, New Eastern Outlook:

Over the course of the past decade the United States, following decades of relative stagnation in oil production, has surprised many to become the largest oil producer in the world, exceeding Russia as well as Saudi Arabia. Latest daily production is just above 12.1 million barrels a day. In November 2018 for the first time in decades the US became a net oil exporter. The geopolitical implications to this energy boom in a world where oil determines the growth of entire economies, would appear to be great. Almost all the increase owes to the exploitation of what is called shale oil, unconventional oil found in shale rock formations. The US Department of Energy projects a rise to 8.8 million barrels daily from US shale oil alone, a new record. Now though, we are seeing the first clear signs that the “shale boom” could implode even faster than it rose. The implications for American foreign policy and global geopolitics and economics are significant.