Oil Prices Skyrocket Overnight

Source: ENB

Daily Standup Top Stories

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

Follow Stuart On LinkedIn and Twitter

Follow Michael On LinkedIn and Twitter

ENB Top News

Energy Dashboard

ENB Podcast

ENB Substack

ENB Trading Desk

Oil & Gas Investing In 2024

– Get in Contact With The Show –

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 the Monday, October 7th, 2024, edition of the Daily Energy News. Beat Stand Up. Here are today’s top headlines. First up, what will happen to oil prices if Israel attacks Iran Oil installations? News flash, they’re going up. Next up, sticking with that theme, Israel Iran showdown threatens India’s energy security. Next up on the global stage, tariffs backfires. China outmaneuvered rivals with global EV investments. And then finally, here at home. House GOP Probes If activist scientist lord study led to Biden Harris LNG export pause. Very, very interesting. Finally, then Stu will toss it to me. I will quickly cover what happened on Friday in the oil and gas markets, mainly covering what was kind of a pretty positive week for prices going from anywhere from $67 to finishing around that $74 mark. And then we will quickly touch on rig counts and let you get out of here and start your week. As always, I am Michael Tanner, back from vacation, has gone all week. So I appreciate you still holding down the fort, but where do you want to begin? Okay, let’s. [00:01:17][67.1]

Stuart Turley: [00:01:17] Start with our buddies here in Israel. In Iran. Holy smokes, Michael, what will happen to oil prices if Israel attacks Iran oil installations? I wrote this when I are getting ready for Tomorrow’s Energy Realities podcast with David Blackmon, Irene 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 that 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, Josh Young, 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. Dr.. And I asked is just wonderful recommend him as well to 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 and 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. [00:03:40][143.1]

Michael Tanner: [00:03:41] 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 they 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 offline, 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. Right. You know, Kharg Island has the majority of their oil refining capacity. And you could see somewhat, you know, 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 in $180 a barrel, which will 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. You know, the one word to describe all this stew, Spicy. [00:04:46][65.4]

Stuart Turley: [00:04:47] Spicy. And one thing that I’m getting a lot of ridicule from from commenting on folks on Twitter or excuse me, acts, if you can imagine that, is China. Everybody’s 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. And. Anyway. And that’s what happens when countries go to war and they are worried about the geopolitical front. So there they’re going to buy everything they can get anyway. [00:05:19][31.4]

Stuart Turley: [00:05:20] Let’s go to the next story, Michael. Israel Iran Showdown Threatens India’s energy Security. I love this article from the standpoint it also has a choke point map in there. And I quite honestly knew. You know, you think about the Suez Canal or the Strait of Hormuz or the Strait of Malacca or around the Cape of Good Hope or any of these kind of things. But there’s all these other smaller choke points as well, like in the Gulf of Mexico. And speaking of Gulf of Mexico, there’s another hurricane coming rolling in. Holy smokes, Batman. It’s going to be a dicey week, but let’s go to the blockade of the Strait of Hormuz would be particularly alarming for India, since it’s the route that from Iraq and Saudi Arabia that LNG takes from Qatar. They take they get most of their their oil from or their LNG from Qatar. But they buy they have been really buying Russian oil ever since the sanctions have kicked in because they’ve been able to buy less than Brant bigtime. Less than Brant. [00:06:24][64.4]

Stuart Turley: [00:06:24] Yeah, absolutely. I mean, in the Middle East right now has really driven as what we’ll talk about some of the price increase specifically in the WTI index over the last week. You know, India, you know, they’re they do what’s best for India. We we’ve talked about that for four, four years now. I do find it interesting with all the talk about how much Russian oil they’re importing, they also get a lot from Middle East and find themselves in this weird buy, not bystander, but really a bystander standpoint from from the fact that I mean, where are if things do bust out in the Middle East, where do they and where do they come and all of this So super interesting. [00:06:59][34.8]

Stuart Turley: [00:07:00] Yeah, absolutely. We’re going to be on it. And really take a look at this. We’re going to China. Our buddies over there, Project Z, is like trying to get on the podcast, so I’ll let you know if we actually get through that one. 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 over the was it the tankers in the bay that. [00:07:25][24.9]

Stuart Turley: [00:07:25] Went from a Putin advisor to a G advisor? [00:07:27][1.8]

Stuart Turley: [00:07:28] So absolutely. China is investing heavily in electric vehicle assembly plants, battery plants 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. V market. [00:08:07][39.8]

Stuart Turley: [00:08:08] They really are. And 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, you 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 it nauseum by how much they lose per vehicle. Well, they’re going to get pounded because there’s no differentiation. And if the only differentiating 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 it 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 Mirrorlink 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. [00:09:42][94.0]

Stuart Turley: [00:09:42] Hey, shout out to Irina Slav for oil price. That’s where we got this article from. She is a fabulous authoress. Yes. All right. Let’s go to the next story here. House GOP Probes If Activist Scientists Flood Study Led the Paris Biden LNG Export Pause. This is absolutely horrific. And the reason I say horrific the GOP has done ad. Absolutely nothing but kind of hold a hearing and then pretend to investigate. This is the kind of crap that should be investigated, tried, hung, and then hold up. And quit printing money. They ought to close that government down until some of this kind of crap is stopped. But they’re not going to. So Howarth is an outspoken advocate for the rapid elimination of fossil fuel, is on the board of directors of the anti fossil fuel nonprofit Food and Water Watch. I think he is a little biased. [00:10:39][56.9]

Stuart Turley: [00:10:40] Yes, just slightly. [00:10:41][0.7]

Stuart Turley: [00:10:42] Slightly. When you take a look at this picture, she is Kamala Harris. I got to hand it to Grok. I asked Grok on X, would you create a picture of Kamala Harris in. This is what I came up with with her with legislation through regulatory action. Two very good looking picture created by X. Yeah. [00:11:00][18.5]

Stuart Turley: [00:11:01] While you’re you are all over rock on X here. I’m surprised you’re going to end up just bringing that on as a full time employee here sooner or later. [00:11:08][7.8]

Stuart Turley: [00:11:09] Well, $8 a month. It’s a lot cheaper than I am. So. [00:11:12][2.9]

Stuart Turley: [00:11:12] No kidding. No kidding. And you know what it does what you ask it to as well. [00:11:17][4.2]

Stuart Turley: [00:11:17] Not all the time. It’s kind of like a wife, you know? [00:11:20][2.8]

Stuart Turley: [00:11:20] Hallucinates a little bit. We’re used to that around here. Don’t worry. [00:11:23][2.6]

Stuart Turley: [00:11:23] Absolutely. All right. After you did. [00:11:25][2.0]

Stuart Turley: [00:11:26] All right, guys. Well, with that, let’s go ahead and jump into the finance section. But before we do that, let’s go ahead and pay the bills, as always. The news and quote unquote, analysis that you just heard is brought to you by world’s greatest website dot energy news. Beat.com the best place for all your energy and oil and gas news. Stu and the team do a tremendous job making sure that website stays up to speed. Everything you need to know to be the tip of the spear when it comes to the energy and the oil and gas business. Go check out the description below for all links to the timestamps. Links to the articles. You can hit us up. The energy news Beat that substack.com and you can also hit us up. Invest in oil dot Energy News Beat.com. If you are interested in finding more about about our direct working interest project. It’s that time of year again guys. If you need tax deductions and you need to lower your overall income so that you don’t have to give it away and you want to be giving it away, too, to whatever administration gets newly elected. No, I’m good. Check us out. We have a great way to save on taxes, generate a little bit extra cash flow on a monthly basis and really become an oil man. That’s the fun part about it. Own some working interest. Put your money where your mouth is. It’s really awesome. Check it out again. Invest in oil dot energy newsbeat.com. [00:12:36][70.5]

Stuart Turley: [00:12:38] I mean so all prices on on a weekly basis guys we saw a huge increase we started the week at about $67 currently sits at 74. You know when you look at the other indices specifically on Friday we saw the S&P 500 up about 9/10 of a percentage point. Nasdaq up 1.2 percentage points. A two and ten year yields went up 5.9 and 3.14 percentage points, respectively, which is pretty unbelievable. Dollar index was actually up a half a percentage point. We did see Bitcoin stabilize at around that $62,000 mark. It’s up about 8/10 of a percentage point here. Saturday to Sunday. Crude oil was up about a full percentage point 7438. Our Brant oil fairly flat, actually dropped about one tenth of a percentage point 7836. Natural gas was down about four percentage points, down to $2.85. But it continues what really was a nice bull run for the last part of the week. I think a lot of what is coming down is, is the fact that some of that Gulf of Mexico production is coming back online. But really, when we talk about what happened with oil prices this week, it really goes back to those first two articles that we talked about, Stu. I mean, what goes on in the Middle East that’s really going to drive where these oil prices were? You know, I love how Biden comes out and says, quote, he would consider alternatives to striking Iranian oil fields if he was in Israel. Shoes released. He woke up and said, I mean, you know, even a blind mice finds cheese once in a while, because I do agree with him. I think Israel probably, you know, this is just that opinion. Israel has to respond. The question is, is responding by hitting oil fields the right move? That’s I would say, from a global economic standpoint, no, but I can’t answer that question. So that’s you know, sometimes we know they won’t come up from his 2 p.m. nap, gave him some talking points. He stumbled through it. I mean, what do you do if you’re Israel? Where are you? Because you have to respond. The question is, is the oil fields the best place to do it? I say no. [00:14:29][110.9]

Stuart Turley: [00:14:30] I couldn’t agree more. And here’s where I get a little bit worked up. They need to be able to supply their own oil and gas and for their own people and then go ahead and do that. That’s one thing. And then in the destruction of that impacts the global humanity. On a general rule, if Biden or Harris, whoever’s in charge says, okay, let’s let them take out the nuclear bomb manufacturing facilities, I could almost actually agree with that, except there is now evidence out there supporting evidence that’s pretty strong. They may already have. Have 6 or 7 nuclear weapons. Now, it may have already passed that time that they can go after their nuclear weapons. I think if they did anything to go after the nuclear weapons only, that is just my opinion. [00:15:21][51.4]

Stuart Turley: [00:15:22] Yeah. I mean, it’s I it’s now we’re talking about. Well, don’t hit the oil. Go hit the nukes sake. We’re literally living in The Truman Show. [00:15:29][7.6]

Stuart Turley: [00:15:30] I think it is. And but you know what? If you look at that one chart from our first article, the difference was Trump enforced the critical sanctions and it held them to no money. That is where all this was. There were no wars under Trump, no new wars under Trump, period. So, yeah. [00:15:51][21.5]

Stuart Turley: [00:15:52] We also did see the the whatever the supply fears in Libya, which we all knew was kind of just a dog and pony show. We knew they were going to resolve it. But all that oil is now back on the market didn’t quite do much relative to prices. So, you know, I think as you as you’re listening to this Monday morning, we’ll probably see prices roll over, you know, probably in that, you know, 74, 50, 74, 60 range. But it’ll be interesting to see what news drops this afternoon. It was a long weeks, too. Obviously. I was out. Wasn’t much really that happened in terms of, you know, what I would call EMP upstream news. There’s a lot of geopolitical news. I’m glad you had the week event. I only caught a few of the shows. So I’m you know, again, I apologize for anybody who was listening. But if we throw up rig counts here, we did see rig counts week over week drop by to 585. That’s still down about 34 from last year. But again, now you can see rig counts in this time were sort of sliding. We’re kind of leveling out about that. It’s going to you know, I think a lot of people and what you’re seeing is the the price environment that we’re in is due to geopolitical and other explanatory factors. We love good $75 oil. I think the issue is and what we were dealing with on the U.S. economy side, specifically from inflation, the cost of everything from an from an oilfield service standpoint has gone up and rightfully so. Oilfield service companies have to make money. But I think that has led to your $75 oil is your new $60 oil. And when I say that is $60 generally was considered that line between, hey, we’ll start considering drilling and we’re going to go ahead and hold off and maybe wait for a either a better price environment or wait for a wait for a better deal to figure out if we can make more oil. Because you make you know, if you’re making 10,000 barrels a day and it cost you $5, you can make money in any oil price. So it’s a matter of price, volume and cost. That’s the three legged monster that you have to deal with when you’re talking about all this. So that’s what I think you’re seeing here, is the $60 price, which used to be kind of that balancing act for all three of those is now truly become 70, $75 oil. And with the consolidation happening around the industry, you’re seeing less and less willingness to go out on a limb here. I mean, a lot of the men, most of these rigs are by the same five companies we keep screaming about. So I think it’s going to be very interesting as we move kind of in the last quarter this year, what all happens, we’re going to start seeing a bunch of earnings come down the pipeline. So be ready for that. But, you know, I would just say, yeah, it’s only going to get more interesting still. What what should people be worried about this week? [00:18:21][149.6]

Stuart Turley: [00:18:22] Like I mentioned, the Hurricane Milton, our prayers will go out for the folks in Florida. Get your generator set up, go out and make sure that you’re ready to help your neighbors out no matter where you are in the U.S., we don’t know natural disaster or manmade disaster. Always be prepared. [00:18:39][17.6]

Stuart Turley: [00:18:40] Yeah, always be prepared. Yeah. You know, and and everyone who’s still trying to survive from from Hurricane Helene with you know, our thoughts and prayers are with you guys specifically in that kind of western Carolina area. So you know, hopefully you can you know, as Stu always says, be prepared for the worst. But with that, guys, we’re going to go ahead and let you get out of here, get back to work, start your week. We appreciate you checking us out here in the world’s greatest podcast, for Stu Truly, I’m Michael Tanner. We’ll see you tomorrow, folks. [00:18:40][0.0][1094.0]

– Get in Contact With The Show –

Energy News Beat