Today some thoughts about world-wide petroleum production by Jack Yetiv in Seeking Alpha where you can Google and find his article titled: $100 Oil is Here to Stay!
I highlight bad news about the future price of oil, but followed it with good news about the effect of our sanctions on Russia’s economy.
Oil and natural gas have been in the headlines continually since Russia invaded Ukraine weeks ago but some of the virtual ink has been misleading….. In this article, Iconclude that oil and gas prices will remain higher for longer, and that fact, combined with a changing attitude toward hydrocarbon production, will incentivize North American producers to produce more oil and gas….
The extensive banking sanctions on Russia, the withdrawal of BP, Shell, Exxon and other oil companies from Russia, difficult oil tanker logistics (2/3rds of Russia’s oil exports are overwater), the refusal of oil traders to buy Russian hydrocarbons, etc., are without a doubt going to substantially decrease Russian oil exports within the next few weeks. Incredibly, even China-no friend of the West–is getting nervous about buying Urals (Russian) crude.
In addition to the West’s new-found aversion to buying Russian hydrocarbons, I believe Russian production of oil and gas will be dropping significantly over the months (and perhaps years) to come.
The draconian economic sanctions against Russia have caused substantial upheaval in Russia’s economy (some experts are projecting an unheard-of 15 to 20% decrease in Russia’s GDP over the next year), and that upheaval will likely lower hydrocarbon production by Russian producers.
I don’t see the above circumstances reversing over the next year. In fact, even if the war is resolved soon–which does not seem likely–I doubt that Russia’s isolation will change anytime soon. I do not see the West’s “self-sanctions” ending in 2022 (nor probably in 2023) and I certainly do not see Shell, Halliburton, Schlumberger and the rest of them rushing back to Russia anytime soon.
In fact, I think the world’s disgust with Putin may actually INCREASE once the missiles stop flying and the war crime investigations begin and more atrocities are revealed.
This war is awful and I certainly don’t have knowledge about its future, but this article at minimum gives me hope that the sanctions implemented by our county and our friends will start having their desired effect very soon. In the meantime our prayers should be for a strong and brave Ukraine.
I’m Steve Sauder
