Loading ...Meanwhile, I sold my oil short a bit too soon concerned about nervous speculators but should of shut out the noise. Now I’m wondering what’s going on even though I expected it could go to 50 next.
Here’s part of why I’m a bit concerned as AI isn’t that far along yet and besides PMs not up to long waits on speculation. Ukraine is the new terrorist of the West, that war was not set up to win but that’s not all going on……
We’ve been watching the West build this sanction package all year through our interest in tanker investments. Although it’s been a slow process, sanctions are finally having an effect.
One example: the youngest tanker in the dark fleet is the 2019-built Dijilah. Even though a modern tanker like this should be earning a fortune right now with spot VLCC rates currently at $120k per day, it has been sitting empty and idle near Sri Lanka for the last five months.
Also, on Dec 3, the European government announced it had reached a deal to forever and permanently end the purchase of Russian gas and oil.
They’re attempting to “shut in” Russia’s oil. Blowing up export infrastructure — in conjunction with sanctions and no more European gas purchases — is proving an efficient way to do that. Expect more of this.
Not only has Ukraine stepped up its war on Russian oil exports, but U.S. forces have seized a VLCC near Venezuela carrying a million barrels of Venezuelan crude… and they’re threatening to seize more of them.
Bloomberg:
The seizure of an enormous oil supertanker off the coast of Venezuela on Wednesday is just the beginning of a new phase in the Trump administration’s ramped-up pressure campaign against Nicolas Maduro, according to people familiar with the operation.
Meanwhile, the market perceives there to be a glut in the oil market. The WSJ:
A Billion-Barrel Oil Glut Is Forming at SeaGeopolitics and sanctions are causing crude to accumulate on the ocean.
Last week, WTI fell about 5% to $57, its lowest price in nine months, and adjusted for inflation, its lowest price since Covid. On Monday it fell more.
This chart shows the WTI oil price (adjusted for official inflation) on a log scale going back 50 years. Oil has rarely been cheaper — relative to the cost of living — than it is today.