Week Recap: Geopolitical Tensions and BP’s Big Shift

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What will happen to oil prices if Israel attacks Iran oil installations?

Serbia’s parliament debates ban on lithium mining

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Michael Tanner: [00:00:10] What’s going on, everybody? Welcome into a special Saturday, October 12th, 2024, edition of the Daily Energy News Beat Stand Up. Man Stu, It’s been an absolutely long week. We appreciate everybody checking out our weekly recap of, man. Long week. [00:00:26][15.5]

Stuart Turley: [00:00:26] Long wait. And thank goodness. As of the time we recorded this intro, nobody has dropped any bombs in Israel or Iran. So we like that. [00:00:35][8.6]

Michael Tanner: [00:00:35] If if. Absolutely. At the you know But hey, the the weekend is a is another story, folks. So we will keep you updated on all that. A lot of great stories, guys. This team goes and is going to pick some of the top stories from the week so you’ll get some of the best stuff that you heard on the podcast. I got nothing else to do. So we’re going to kick this off, as always, guys. All this stuff brought to you by the world’s greatest website, energy news beat.com is doing the team, do a tremendous job trying to keep that website up to speed. Go hit the description below, links of timestamps links to the articles, and you can also check us out on substack. And you also can hit and go to invest in oil dot Energy News beat.com. If you are interested in our direct working interest project, it’s taxes are folk. I can’t stress this enough. If you are a high net worth individual and you are paying taxes, we have the solution for you. Invest in oil dot energy news be.com the best way to mitigate your taxes by your portfolio and gain a little bit of monthly income is from investing directly in oil projects. And we have the hook up guys invest in oil dot energy news because I’m going to go and toss it over the team. We’ll see on Monday, folks. [00:01:39][64.3]

Stuart Turley: [00:01:40] What will happen to oil prices if Israel attacks Iran oil installations. I’ve wrote this when I are getting ready for tomorrow’s Energy reality podcast with David Blackman, Irina Slav and Tammy Nemeth. And we’re talking about oil prices around the world. And if Israel were to attack Iran’s oil installations, the immediate impact on oil prices would likely be a significant increase. Really? But there’s different layers. I didn’t really even think about half of this until going through the research on this small scale attack. Only 5% major refinery or export terminal. There’s one island, Michael. It’s I believe the Kharg Island has 95% of their export. But if they actually did the downstream, that would have a whole different animal. I did not know, Michael, that Pakistan is a gray market where they smuggle in gasoline from Iran. I did not know that one. So when you take a look at this, this is really bad. But Michael Jackson, I absolutely recommend everybody follow. Josh Young. When you take a look at what sanctions matter, if they’re imposed and done correctly, look at the amount of Iran linked violence in the Middle East to spiral out of control. Do you want to know why we got here? Take a look at this one chart. Trump versus Biden on the impact of oil fields, sanctions and the implementation. But let’s also look at an and I asked here real quick, doctor and I asked is just wonderful recommend him as well, too. During the Biden administration not only U.S. crude exports hit record but Iran’s it export a big time. Now, here’s the key thing. Dan Saul on Twitter, I love this one. He has a big red circle around the troubled spots. It’s the Middle East. He goes bang. That is an analysis that I can deal with. Who knows what’s going to happen, Michael? I don’t know how it’s going to turn out If Israel strikes and does a death blow on this, I think it’s going to help. The only person that’s going to help is Russia. Everything is a failure. [00:03:59][139.1]

Michael Tanner: [00:04:00] Again, I think what I like about this article is it kind of breaks it down into kind of multiple different scenarios. You’ve got the small scale attack, which is, you know, if it’s limited to a potential small portion of wherever their Iranian oil output is, you could see somewhere of a 5 to 10% increase because, you know, that number probably will be about 10 to 20% of Iranian oil production. It takes off like if that to escalate into, as you said, an export terminal. This is where you could see that oil price increase past $100 a barrel, specifically on both the WTI and the Brant oil price. You know, Kharg Island has the majority of their oil refining capacity. And you could see somewhere in the 30 to 50%, you know, I mean, if it’s if it’s a full scale attack, I mean, you’re going to see anywhere between 100 and 20 probably and $150 a barrel, which would absolutely be devastating to the economy, not just United States, but also abroad. It’ll be interesting to see where Israel goes. I mean, they’re really fighting a war on seven fronts. So you can’t necessarily blame them for having this opinion. I would be interested to see, though, specifically with the U.S. providing a lot of advice to them what they decide to do in response to all this escalation. We you know, the one word to describe all this do spicy. [00:05:05][65.4]

Stuart Turley: [00:05:06] Spicy. And one thing that I’m getting a lot of. Ridicule from from commenting on folks on Twitter or excuse me, ex, if you can imagine that is China. Everybody saying that they put too much weight on China’s demand and its impact on oil. I don’t think that that’s a false number because they’re buying everything they possibly can anyway. And that’s what happens when countries go to war and they are worried about the geopolitical front. So they’re buying and they’re going to buy everything they can get anyway. Tariffs backfire as China, our worst rivals with global heavy investments. You remember when you and I were laughing and the Chinese wanted to interview us? So were the was it the tankers in the bay that went. [00:05:52][46.1]

Michael Tanner: [00:05:53] For about Putin advisor to AG advisor. [00:05:54][1.6]

Stuart Turley: [00:05:55] So absolutely. China is investing heavily in electric vehicle assembly plants, battery plans and transition technologies. They are really outmaneuvering everybody on this. Hungary is a beneficiary of what the Financial Times reported as a tsunami of transition investments around the world. Central European country is often at odds with the central EU government in Brussels, and they should be. The Chinese invested abroad roughly 12% increase. Unbelievable. Or 112 billion over the first eight months of this year. They’re printing money and going after the E market. [00:06:35][39.8]

Michael Tanner: [00:06:35] They really are. I think they see an opportunity with the extreme high cost of domestic made EVs. They see they have a chance to go ahead and make small ones. Now, both Trump and Biden have mentioned the tariffs that they’re going to levy on China in an attempt to even the playing field. But but really, I think what gets hurt in this scenario is, one, a product that’s not differentiated. It’s one of the reasons why I think Tesla will win, even if they are more expensive, is because they’ve differentiated themselves from the market by having full self-driving, by having basically a completely new concept for a vehicle. I mean, to get into a Tesla, you feel like you walk into a spaceship relative to some of these other cars, whereas and so you only what really gets Hertz, that middle market brand, you know, the, you know, the 40 the we’ve talked at nauseum about how much they lose per vehicle. Well, they’re going to get pounded because there’s no differentiation. And if the only contributing factor of your car is that it’s electric, well, you’re going to lose to a gas powered vehicle every single time, at least today, because of the efficiency of it. So I think it’s extremely it’s in everyone’s favor to either continue to make luxury EVs and make them as novel as possible and find what your niche is. Tesla’s figured out with the self-driving, but then also figure out, okay, we are probably then going to have these really low cost options from China because they’ve gone out and sourced all the mirror I think is the biggest input into all of these cars from a cost standpoint is the sourcing of the raw minerals and metals and those batteries. China has done a great job of going out and getting all of those mines under its control. You bet. [00:08:09][94.0]

Stuart Turley: [00:08:10] Hey, shout out to Irina Slav for oil price. That’s where we got this article from. She is a fabulous authoress. Yes. Our historic short squeeze sends oil prices higher. In this story, they’re talking about when funds were the most short on oil on record, the broader energy space was the most sold sector. Goldman You as prime but driven by U.S. short sales, real pace by long buys for 6.41. And here we say was the hint to the next mega squeeze as the reason short selling in energy was the largest in over five years. That’s pretty nuts when you take a look at over the last five years and short selling, they’re really betting on it. Reza and Maggie mostly trades equities. But for the past week, he’s been dipping in and out of the oil market, lured by the crude’s biggest weekly rally in nearly two years. Quote, Ever since we reached 67, it’s been going up quite steadily, An orderly said. They’ll be they’ll get money, I believe. I apologize for pronouncing your name wrong. A Phenix based day trader who’s been trying to capitalize on the market short term decision. When it’s orderly, it’s great. I’ll tell you what, I’m really kind of nervous about the whole thing, though. And there’s a lot of great information in here. The the bottom line with record, George now painfully squeezed, is upward. Momentum has ignited across the energy sector in with a flashing red line that is you that Israel has level the Kharg island and the looming and unwind what a week ago a record short position in oil and energy stocks is just getting started. Buckle up And well, if you’ve got the nerve or the stomach, go make some money. [00:10:02][112.8]

Stuart Turley: [00:10:03] Serbia’s parliament debates a ban on lithium mining. This is. This huge Serbian parliament began debating on opposition a proposal to ban lithium and boar mining and exploration, which effectively put an end to a contested Rio Tinto project in the west of the country. I agree there is a time and a place there’s never been a greater danger for Serbia and nothing will stop without lithium. There will be no apocalypse and no stereotype. The ruling coalition said it will not look back. The opposition proposal has a comfortable majority of 156 deputies in the 250 seat parliament. Parliament will vote on the proposal in the coming days, pending the end of the debate. I have mixed emotion. Mining is something that you do need. Energy security needs to be done as much as you can within your own country. However, there is a lot of discussion on lithium mining in the United States and whether or not there are companies that are going to take advantage and destroy land or make a land grab over mines if that is the case. Mining is not a good thing. And I don’t know that the energy transition is actually in the best possible light in order to do that. So I think it is going to be very interesting to see how this turns out. In Serbia’s parliament, we’ll be following it. And with that. [00:11:33][90.6]

Michael Tanner: [00:11:34] From our good friend Robert Bryce, the dollar’s stonewalling on residential energy costs and its electrify everything push. It’s pretty, pretty crazy here. So basically what this article goes on to say. One is that they’re rolling out a bunch of new rules on, you know, go forward electrification. They just the EPA and the Department of Energy just released the new definition of zero emission buildings. And what that basically means is that the buildings need to be free of on site emissions from energy use. And I love this little quote from the article. It doesn’t take a mechanical engineer to understand that the definition precludes using a boiler or furnace that burns hydrocarbons. You know, the agency did push back a little bit and said that this is not a regulatory standard. But they do go on to note, however, that eight major green building facility certifications have been agreed and that they, quote, embed or align the exceeded the zero emission definition within their certification. Basically what that means is that the Doe has adopted this definition that really isn’t a regulation, but will basically force companies and force people to use those green use that non regulation as a regulation. Another example of stuff always likes to talk about legislation you let through regulation. I think discharge really interesting. Ms. Producer we don’t mind throwing this up. Electrify everything. Who pays? This is according to the Doe, the energy equivalent residential energy cost from August 2023. Natural gas is the lowest of $14. Heating oil is the second lowest. At 28, propane is at 33, kerosene is at 34 and electricity is at $46. This is obviously on a per amp BTU basis. And basically what he goes on to say here is that they haven’t released the 2024 numbers and you below 2020, you know, basically going back all the way to 2011, these were released sometime in March and April. Last year was the first time it wasn’t published until August. And we just saw that little chart here. It doesn’t look good for electricity. And basically they haven’t released it this year. It’s October 8th and they haven’t heard anything. It’s pretty unbelievable. They keep saying, it’s imminent, it’s imminent. It’s in a minute. And basically the assumption that Robert’s saying here that I agree with this, you know, they don’t want to release this because it’s not going to look good. Electric buying, everything is going to cost more. It’s going to be driving cars up and we’re in an election. So they don’t necessarily want to make it. The vice president, Kamala Harris, look worse than it already is. And this is I love this here. The unfortunate punchline here is obvious. The Doe has politicized its legally required reporting requirements. It refuses to publish the residential energy price data because the numbers will be embarrassing for the Doe and the Biden administration at the very moment Vice President Harris is vying to be the next president. And I love that he always ends with this. I may be mistaken about this, but until the he proves me wrong, I will remain convinced that the agency is stonewalling. And you know what? They’re probably right. Okay. He’s got nothing there. [00:14:36][181.9]

Stuart Turley: [00:14:36] Why? BP’s elimination of 2030 oil reduction target is no real surprise. This is from our buddy over there, David Blackmon, on his substack. British oil giant continues efforts to adjust its business plan to make itself more competitive with peer companies. Translation, they need to keep up with Texas and Chevron and excellent. They miss the boat. Elimination of the targeted production cuts allows for a series of moves earlier in 20 to 24. I think what they. It is. They actually also said peak oil is not going to happen in their big BP output. This is a follow along to that. To no one’s real surprise, Reaction to BP’s latest move from the anti fossil fuel activist community was swift and aggressive. The Guardian quotes Greenpeace UK senior climate manager Philip Evans as saying, quote, This is yet further proof we cannot leave the future of our planet in the hands of fossil fuel bosses. It’s clear that BP CEO Murray Akins classed as hell bent on prioritizing company profits and shareholder wealth above all else, as extreme floods and wildfires rack up billions of dollars in damages, destroying homes and lives all over the world. Oil companies cannot be trusted to curtail their further destruction of the planet, unquote. [00:16:01][85.5]

Michael Tanner: [00:16:02] What I find hilarious is that these are the same guys that do the BP energy outlook. And basically every year it’s doom and gloom for oil and gas. Yet the CEO of the same call, this guy Murray Atchison, used to be the CFO, is paying all of the bills for this oil outlook report and they don’t follow a darn sentence of it, which I find just hilarious to be going to show you. You know, what you say over here isn’t necessarily what you do over here. It’s unbelievable. I mean, again, as the title said, no real surprise, especially where oil prices are relative to where BP’s acreage is. I mean, they talk about getting back into the Gulf of Mexico. They talk about diving in with BP and maybe getting a little bit more into the Permian. I mean, why would you not? So it just it cracks me up. [00:16:53][51.3]

Stuart Turley: [00:16:54] They just sold off a bunch of stuff there when assets and stuff and they’re bailing out of renewable energy to go back to their core. [00:17:02][8.2]

Michael Tanner: [00:17:03] Yeah. I mean, they obviously they still have about ten U.S. onshore wind operations through its subsidiary, BP wind Energy. He also did this. This Marine watching close also did go ahead and say they’re looking at acquiring the remaining 50% of that joint venture they have. That’s called Lightsource BP. So they’re not it’s not an outright abandonment. Obviously, they’re in the U.K. They can’t quite abandon it. You going to got to keep yourselves as an arm. You got to got to keep yourself at least an arm’s reach away from it. You always pull it in as we got a little bit. We got a little bit, yeah. We’re also going to spend $1 billion in the Gulf of Mexico and we’re going to go buy a couple million dollars worth of Permian stuff. So it’s just it’s funny. But, hey, I give them credit for for, you know, what is it, the Star Wars, what you do, what must be done next. And then you got you got do. [00:17:47][43.8]

Stuart Turley: [00:17:47] And I’ll tell you what they do. They learn from Exxon and Chevron. And and that is they got to get back to the money and their shareholders and the UK is going to force them out of the UK. Just watch what happens. [00:18:00][12.5]

Michael Tanner: [00:18:00] Welcomed with open arms here. [00:18:00][0.0][1060.9]

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