Energy Sector

[Dalal.Holdings]

https://www.reuters.com/business/energy/opec-considers-raising-oil-output-by-550000-bpd-august-sources-say-2025-07-05/

 

More Flooding

 

Quote

LONDON, July 5 (Reuters) - OPEC+ agreed on Saturday to raise production by 548,000 barrels per day in August, further accelerating output increases at its first meeting since oil prices jumped - and then retreated - following Israeli and U.S. attacks on Iran.

 

The group, which pumps about half of the world's oil, has been curtailing production since 2022 to support the market. But it has reversed course this year to regain market share and as U.S. President Donald Trump demanded the group pump more to help keep gasoline prices lower.

 

[Dalal.Holdings]

On 7/3/2025 at 11:33 AM, Saluki said:

The market feels weird. Besides oil not budging after the US bombed Iran, afterwards the Iranians threatened to shut down the Gulf of Hormuz, and my oil tanker stocks didn't budge either. Normally, like when the Houthi attacks were going on, rerouting ships will cause a shortage and spike day rates. Everything is weird now. 

 

Oil isn't just going to trade on vibes.

 

You have to ask whether any of those things actually changed supply/demand in a meaningful way. The answer is No.

 

If anything, supply just keeps going up...

 

 

[Dalal.Holdings]

https://www.politico.com/news/2025/05/12/trump-saudi-us-oil-industry-00332620

 

Quote

Trump’s current stance on energy appears to confirm what U.S. oil executives have been fearing: If caught between higher production and low prices, he’ll pick the latter, said Bob McNally, founder and president of the consulting firm Rapidan Energy Group and a former energy adviser to President George W. Bush.

 

I can't believe this is news to some folk. 

 

https://www.nytimes.com/2025/07/05/business/opec-oil-production-price.html

 

Quote

Analysts say the Saudis appear to be responding to pressure from other members, including the United Arab Emirates, for higher output. They also appear to be trying to please President Trump, who has made courting Saudi Arabia and regional allies like the United Arab Emirates a priority of his foreign policy.

 

Trump liking low oil prices is something that should have been apparent to everyone, but I guess it wasn't.

[SharperDingaan]

Most of those bbls will be nation to nation, and will bypass the market entirely. The physical going into the various SPRs.

 

Companies just cut back on capex and continue with the dividends and buybacks. Once opec consistently fails to deliver on its promises, prices run back up - 'cause they will have run out of excess capacity. Depletion is a bitch 

 

SD

 

 

[Dalal.Holdings]

OPEC wells are not shale wells. If you wait around for them to deplete, it’ll be a loooong time. Massive opportunity cost.

 

“Most of the bbls will be nation to nation” sounds highly suspect. Oil is largely a global commodity. Plus, the stuff in West Texas and West Canada trades at discount to Brent.

 

I’ve been bearish oil for a while and prices have gone down and down while supply keeps up and growing.

 

I think people in the Oil Patch wear perpetual rose colored lenses…eventually the prices will force pain on them. Until then, these guys will always just do the only thing they know how to do: just go make more oil. The only way that stops is when there is real pain in the sector. There has been no pain thus far and so I’m not interested.

 

As usual, the genius of the likes of Buffett/Graham are proven true:

 

“Ben Graham told a story forty years ago that illustrates why investment professionals behave as they do. An oil prospector, moving to his heavenly reward, was met by St. Peter with bad news. “You’re qualified for residence,” said St. Peter, “but, as you can see, the compound reserved for oil men is packed. There’s no way to squeeze you in.” After thinking a moment, the prospector asked if he might say just four words to the present occupants. That seemed harmless to St. Peter, so the prospector cupped his hands and yelled, “Oil discovered in hell.” Immediately, the gate to the compound opened and all of the oil men marched out to head for the nether regions. Impressed, St. Peter invited the prospector to move in and make himself comfortable. The prospector paused. “No,” he said, “I think I’ll go along with the rest of the boys. There might be some truth to that rumor after all.” —WARREN BUFFETT, 1985

[SharperDingaan]

Point is that 2%/yr on current TOTAL production is a very big number. If production is just to stay flat, all of this is new production to be added in the next 12 months ... then do it again next year. Primarily secondary and tertiary recovery from existing fields, NOT NEW FIELDS that take years to develop. As USD 62-65 is pretty much Trumps USD 50 after USD devaluation, markets aren't reacting violently.

 

Most physical oil is sold nation to nation, and usually with some form of trade recycling (weapons, influence, etc). Poorer nations often  selling under cost so as to mitigate BoP issues. Most all trading paper as well as physical.

 

Wildcatting is pretty much history today, and good riddance. Now it's all bean counting and asset stripping as the world turns to other energy sources. Lot of money to be made, but it ain't going to be via buy and hold forever.  It'll be via dividends and buybacks.

 

SD

 

 

 

 

 

 

 

Edited July 6, 2025 by SharperDingaan

[Dalal.Holdings]

 

 

 

[bizaro86]

6 hours ago, Dalal.Holdings said:

 

 

 

I dislike so many things about that graph even though I agree with the sentiment that oil people do too much capex.

 

The scale for production doesn't start at zero, which means the changes are exaggerated. 

 

I also think comparing production to rigs is sort of stupid. The rig count doesn't affect the production base, only the growth from new wells. The better way to do that would be to look at the total rig days from each year and build a production wedge of the amount of production from wells that were spudded in that year. 

 

It's a tricky question because the base decline is always changing, and the shape of the new production wedge changes as well depending on the type of wells drilled.

 

Complicated, but hard to put on one graph for twitter. Of course, as long as you have people like Vicki "more capex and deals" Hollub running producers the industry will continue to be overcapitalized. 

 

That's my favourite thing about the Canadian oil sands names - they basically can't get new capital and execs are so worried about losing their jobs they've paid down debt, so most future cash flow is going to dividends/buybacks for most of them.

[whiskybravo]

Today’s Doomberg piece is particularly sobering.  China is helping to fund ongoing climate law fare with the goal of hindering US energy development, while at the same time liberally using coal to build the world’s largest, most advanced energy grid.  This is being translated into military advantage.

 

 

[sleepydragon]

Why are energy companies stocks in particular OXY surging today? I don’t find any news

[sleepydragon]

2 hours ago, whiskybravo said:

Today’s Doomberg piece is particularly sobering.  China is helping to fund ongoing climate law fare with the goal of hindering US energy development, while at the same time liberally using coal to build the world’s largest, most advanced energy grid.  This is being translated into military advantage.

 

 

being centralized planned and a rubber stamping system, all plans appear supremely smart. But execution is watered down and such plans are carried out so that everyone can get a bit of money from the action. 

[Ulti]

https://www.reuters.com/business/energy/how-canadas-oil-sands-transformed-into-one-north-americas-lowest-cost-plays-2025-07-16/

[SharperDingaan]

On 7/16/2025 at 7:36 AM, Ulti said:

https://www.reuters.com/business/energy/how-canadas-oil-sands-transformed-into-one-north-americas-lowest-cost-plays-2025-07-16/

 

There will be mergers once Canada's new infrastructure projects are underway, and their sizeable existing plant (built years ago) will make them even more competitive. Simply 'cause the cost efficiencies from a new build replacement plant, are not enough to overcome the interest on the cost difference between new build and buy. A moat that will keep getting stronger with inflation (tariffs), higher interest cost (US debt refinancing), and rising throughput efficiencies.

 

SD

 

[Dalal.Holdings]

https://www.bloomberg.com/news/articles/2025-08-03/opec-agrees-big-output-hike-to-finish-unwinding-round-of-cuts

 

Another output hike from OPEC+

 

Quote

Saudi Arabia and its partners agreed on a video conference to add 547,000 barrels a day next month. This completes the accelerated reversal of a 2.2 million-barrel cutback made by eight members in 2023, and also includes an extra allowance being phased in by the United Arab Emirates.

 

[gfp]

Makes me wonder what ever became of our young board member Blake Hampton?  Hope he is well and just went on a summer vacation.

[Dalal.Holdings]

https://www.ft.com/content/f793e403-904b-47e6-9749-9e20a4aa9173

 

Well, looks like the European oilcos are moving on from their ESG break and now back to finding more oil...

 

Quote

Analysts at HSBC said that Bumerangue could be a multibillion-barrel find, and that it was located near other giant fields in the basin.

 

Quote

In February, Auchincloss said BP would invest $10bn a year, or 20 per cent more than previously planned, on oil and gas in order to step up exploration and increase production.

 

The oil companies just keep finding more oil while prices are nothing special...

 

Edited August 4, 2025 by Dalal.Holdings

[Dalal.Holdings]

 

 

[Libs]

Oil popping a little here. I don't follow this space closely, but it strikes me that Trump's Putin deadline is tomorrow. There are several (oil) levers he can pull to hurt Russia. We'll know soon. He sure surprised everyone when the Iran deadline hit. Not trying to be political.

[Spekulatius]

I don’t think sanctions on Russian oil will have much impact on the crude supply situation. China, Saudi Arabia etc will

continue to buy their oil. Same is likely true for India.

Edited September 2, 2025 by Spekulatius

[TwoCitiesCapital]

They've found enough buyers that the discount to "legitimate" sources has narrowed dramatically since the invasion. 

 

I don't think he has much flexibility here which is probably why he keeps pushing back deadlines and watering down cease fire goals. He doesn't have the cards for the hand he's trying to play. 

[Dalal.Holdings]

Even the Europeans can't stop buying Russian gas

[Spekulatius]

22 minutes ago, Dalal.Holdings said:

Even the Europeans can't stop buying Russian gas

Austria, Hungaria and Slovakia are most dependent on Russian gas. The latter two governments have strong affinity to Putin, so it’s not surprising.

[John Hjorth]

9 minutes ago, Spekulatius said:

Austria, Hungaria and Slovakia are most dependent on Russian gas. The latter two governments have strong affinity to Putin, so it’s not surprising.

 

Yes, it's complicated.

 

Wikipedia : Russia–Ukraine gas disputes

 

Edited September 2, 2025 by John Hjorth

[John Hjorth]

4 hours ago, John Hjorth said:

 

Yes, it's complicated.

 

Wikipedia : Russia–Ukraine gas disputes

 

 

Pipeline missing in the chart, though :

 

Wikipedia : Baltic pipe, by now fully operational, delivering gas from Equinor's gas fields.

 

And while we're talking about Norwegian peoples complacency, here is a photo of Nicolai Tangen arriving at work at Bankplassen, Oslo, showing off his wheels [running wheel, no chauffeur, though!], while his uber cool flat on the southern end of Akers Brygge is in walking distance, workplace www.nbim.no :

 

 

 

 

YouTube - NasDAQ : Inside the Mind of a CEO: Nicolai Tangen on Work-Life Balance and Financial Advice, including a bit about his morning routine at the end.

 

 

Edited September 3, 2025 by John Hjorth

[Dalal.Holdings]

https://www.bloomberg.com/news/articles/2025-09-06/opec-agrees-in-principle-to-increase-production-in-october?srnd=homepage-americas

 

Yet another production increase from OPEC+. They are telegraphing their intentions clearly...

 

Quote

OPEC+ has agreed in principle to increase production again next month, according to delegates, as the group doubles down on its policy shift to pursue market share instead of defending prices.