Iranian President Hassan Rouhani has sternly warned the United States and threatened retaliatory action against Washington should it dare cause any hitches to the transportation of Iranian oil tankers to Venezuela. Rouhani says Iran would never start a conflict but has the legitimate right to defend its national interests, sovereignty, and territorial integrity.
The Iranian army is escorting tankers to Venezuela to deliver oil. Earlier, the United States said it could block the tanker from reaching Venezuela. The five tankers are expected to reach Venezuela soon. Venezuela’s Defense Minister noted that oil tankers will stop at the port in the special economic zone.
An Iranian media network that is aligned to the reigning regime has issued a warning to the United States government against carrying out any moves that would jeopardize its oil shipment to Venezuela. The ship that is destined for the Latin American nation has already left the port.
US President Donald Trump allegedly gave the Saudi administration an ultimatum to stop the infamous price war with Russia. On April 2, Trump apparently made a phone call to Saudi Crown Prince Mohammed bin Salman (MBS), letting him know that unless the Organization of the Petroleum Exporting Countries (OPEC) cut oil production, he would allow lawmakers to go ahead and legislate a US troop withdrawal from the kingdom.
Under the new Saudi- Russo oil deal, Saudi Arabia and Russia lead the record for oil cuts as part of the agreement committed by 23 countries to withhold 9.7 million barrels a day from markets. Western publications, including The New Yorker, ran articles this week with headlines such as “How the Russian-Saudi Oil War Went Awry—for Putin Most of All.”
With declining oil demand following the Coronavirus Crisis, major oil-producing countries have reached a historic agreement to cut production by 10 million barrels per day. The move is a small step in easing concerns about falling oil prices. It also marks the improvement of relations between Saudi Arabia and Russia, two powerful OPEC Plus blocs.
The US Department of Energy is urging the administration of US President Donald Trump to form an alliance with Saudi Arabia in an attempt to regulate world oil prices, which could lead to Saudi Arabia withdrawing from OPEC. This information became available via The Wall Street Journal which claims that supporters of the US oil Alliance with Saudi Arabia are calling for stabilizing energy prices and preventing their collapse, which occurred after the OPEC talks in Vienna in early March.
This week, one of the main topics around the world is the so called “oil war” between Russia and Saudi Arabia. A myriad of publications are claiming the Russian economy will tank during this oil price war. According to the various economic models, the Russian economical crises is supposed to reach its peak in 2025. That is another reason, beside Putin’s personal aspirations, why he wants to remain in control of Russia. At that point, it could be possible for the West to weaken Russia.
Indian company Reliance Industries owner and leading industrialist Mukesh Ambani was the richest man in Asia until yesterday, but what happened in one day that this crown disappeared from him? On Monday, Asia’s most common market share saw a sharp fall, and oil prices dropped significantly.
In order to complete Nord Stream 2, Russia decided to have the Gazprom vessels accompanied by Russian warships. The route is from the Indian ocean to the Mediterranean Sea. Nord stream 2 is a new export gas pipeline from Russia to Europe via the Baltic Sea. The combined capacity of each of the two Nord streams lines is expected to be 55 billion cubic meters of gas per year. Thus, the total design capacity of Nord stream and Nord stream-2 is 110 billion cubic meters of gas per year.
The killing of General Qassem Soleimani by the United States escalated its conflict with Iran to crisis level. Of course, U.S. President Donald Trump has, on numerous occasions, openly declared that his main objective is to put maximum pressure on Iran so as to force it to redact its nuclear program ambitions.
OPEC is considering extending its oil production cuts until the end of the year, as the markets are still looking downward, but discussions remain at an early stage. Russia’s TASS news agency quoted a source within the organization on Friday. The source said the group, which includes two oil exporters, was due to meet in March, but it might also meet in June to decide on the policy.
Russia’s head of the Minenergo, Alexander Novak, recently stated the nation’s interest is to gradually severe ties with OPEC, the Organization of the Petroleum Exporting Countries comprised of 14 nations. Founded in 1960 in Baghdad by the first five members, OPEC moved its headquartered in 1965 to Vienna, Austria. The countries that joined later were:
Iraqi dеmоnѕtrаtоrѕ соntіnuеd on Wеdnеѕdау tо сut оff аll rоаdѕ leading to оіl fіеldѕ аnd sites in Zubair district, west of Bаѕrа city, іn рrоtеѕt against the dеtеrіоrаtіоn оf the есоnоmіс ѕіtuаtіоn in the country dеѕріtе іtѕ hugе oil rеѕоurсеѕ. According tо nеwѕ sources,” thе dеmоnѕtrаtоrѕ рrеvеntеd еmрlоуееѕ frоm ассеѕѕ tо оіl ѕіtеѕ, whоѕе еxроrtѕ ассоunt fоr 70 реrсеnt оf Iraq’s oil.
Sаudі Arаmсо hаѕ аnnоunсеd аn initial рublіс оffеrіng (IPO), wіth a рrісе rаngе of SAR 30-32 реr ѕhаrе ($8 to $8.50), giving рrіоrіtу to Sаudі іnvеѕtоrѕ. Aссоrdіng tо thе рrісе range, the vаluе оf thе wоrld’ѕ most рrоfіtаblе соmраnу rаngеd frоm $1.6 tо $1.7 trіllіоn. The соmраnу wіll аnnоunсе the final ѕhаrе price оn Dесеmbеr 5.
Thе Sudаnеѕе Cаbіnеt іѕ mоvіng tо rеduсе ѕреndіng on the ѕесurіtу ѕеrvісеѕ and аuthоrіzеѕ the gеnеrаl budget fоr 2020 to fосuѕ оn thе еduсаtіоn and hеаlth ѕесtоrѕ. Thе sources ѕаіd that the vіѕіоn оf the trаnѕіtіоnаl gоvеrnmеnt is tо асhіеvе a соmрrеhеnѕіvе peace іn thе соuntrу, whісh rеԛuіrеѕ rеduсіng spending оn ѕесurіtу ѕеrvісеѕ. The ѕроkеѕmаn of the Sudanese gоvеrnmеnt Faisal Saleh, іn рrеѕѕ ѕtаtеmеntѕ, ѕаіd thаt the Council of Mіnіѕtеrѕ аррrоvеd thе general guidelines fоr thе budgеt fоr 2020, focusing оn thе еduсаtіоn аnd hеаlth ѕесtоrѕ.
Irаn has аnnоunсеd thе dіѕсоvеrу оf a lаrgе oil fіеld, with rеѕеrvеѕ of 53 billion bаrrеlѕ of crude oil. The nеwѕ оf the dіѕсоvеrу оf thе оіl fіеld іn thе іntеrnаtіоnаl mеdіа hаѕ also been widely reflected. Hаѕѕаn Rоuhаnі announced the discovery Sunday on state television. However, Iran fасеѕ rеѕtrісtіоnѕ оn thе ѕuррlу аnd sale оf оіl duе to ѕеvеrе oil sanctions. In аddіtіоn, the еxtrасtіоn and ореrаtіоn of this lаrgе oilfield require ѕресіаlіzеd capital and knоwlеdgе, including foreign capital аnd tесhnоlоgу.
This week, Durig looks at an energy company that is making the transition from its historical focus on natural gas to be more focused on oil production. Chesapeake Energy (NYSE:CHK) has been making strides this year to transition towards a more oil focused production portfolio. Chesapeake has already increased oil in its production portfolio from 17% in 2018, to 24% as of the end of the second quarter. The company estimates it will exit 2019 with oil representing 26% of its production. Oil is a higher margin product, so Chesapeake is already seeing the fruit of its decision (see bullet points above).
An Iranian tanker was hit on Friday in the Red Sea by two blasts, both of them, according to Iranian state media, caused by missiles. The incident took place off the coast of Saudi Arabia and soon raised fears of escalating tension between the two countries in the unstable region. The missile attack could not yet be independently confirmed, but the location of the Red Sea would be unusual— most hostilities involving Iran occur in the Persian Gulf.
Venezuela denied responsibility on Thursday for oil spills that polluted more than 130 Brazilian beaches. In the community, Venezuelan state oil company PDVSA said Brazil’s accusations about the origin of the oil are unfounded. “PDVSA categorically rejects statements by Brazil’s Environment Minister Ricardo Salles, who accuses Venezuela of being responsible for crude oil that has contaminated the beaches of northeastern Brazil since early September,” the state-owned company said.
The US has announced plans to send forces to Saudi Arabia in the wake of attacks against the country’s oil infrastructure. Historically, before a war there is a provocation. However, looking at the attack trajectory, there are a few odd details in the scenario.
The Saudi monarchy experienced attacks against their oil production facilities in the last week. Tensions in the Middle East escalated following the drone attacks on the two largest oil facilities in Saudi Arabia. Yemen’s Houthi rebels claimed responsibility for the attacks.
The global economic impact will be felt, since Saudi Arabia lost more than half of their crude output via the attacks. The nation is the number one oil producer in the world, holds 5% of the global oil supply, and cut output by 5.7 million barrels per day. last year, Aramco’s net income was $111.1 billion.
This week, Durig Capital takes a look at a unique oil and gas producer. Reviewed several times in the past, most recently in May of 2019 following the company’s release of their Q1 Results, California Resources Corporation (NYSE:CRC) produces oil, natural gas and natural gas liquids (NGL) strictly within the state of California. And, it sells all of it oil production in the state of California, which, as a state, represents the 5th largest economy in the world. The company recently signed its third major joint venture agreement, which will allow the company to add production and revenue with no initial capital cost to CRC. In addition to this great news, CRC also posted some excellent results from its second quarter (see bullet points above).
Oil prices rose at the beginning of this week, on the back of the attack on Saudi Aramco facilities. Brent crude futures reached $71.95 a barrel, the largest percentage gain since the start of the Gulf War in 1991. Saturday’s attacks stopped production equivalent to 5% of global oil supplies.
This week, Durig Capital takes a look at a company that provides compression services and equipment for the oil and gas industry. With the demand increasing for takeaway capacity from oil and gas fields around the country, CSI Compressco’s services become even more valuable and essential. The company had a fantastic second quarter, with record setting utilization, increased revenues and adjusted EBITDA.
Second quarter overall utilization came in at a record setting 89.1%.
Revenues increased by 36% over second quarter 2018.
Adjusted EBITDA increased 22% over first quarter and 41% year-over-year.
Outstanding interest coverage of 2.2x.
The majority of all global conflicts are connected to oil. The map below provides the current oil resources available globally. The power of the Black Gold and greed has been overriding human lives for close to 100 years. The first large scale demand for petroleum was documented in the 1880s due to kerosene been derived from petroleum.
A month ago, Iran’s Revolutionary Guard shot down an unmanned American drone in the Strait of Hormuz. Later that week, President Trump called off a retaliatory military attack on Iran at the last minute. He explained the next day that he did not believe the loss of Iranian lives to be proportionate to the loss of a machine. On Thursday, the United States appeared to level the score. US Marines jammed an unmanned Iranian drone in the Strait, downing the aircraft and destroying it. The incident reignited tensions between the two countries, which seem to be stumbling toward war.
In a scene reminiscent of Oregon— or Moldova— two separate sides gathered in two separate locations to convene two separate special sessions of the legislature, ostensibly to find two separate solutions to Alaska’s mounting budget crisis. With 38 senators and representatives gathered in the state capital, Juneau, and 22 in Wasilla, the hometown of Republican Governor Mike Dunleavy, an attempt to override some $440 million in spending cuts appeared to fail Wednesday. A three-fourths vote by a joint session (one would assume, held in the same place) will be needed by Friday, or Gov. Dunleavy’s line-item vetos will stand.
This week, Durig Capital looks at an oil producer who has built its company using non-traditional production techniques. Denbury Resources (NYSE:DNR) has been successfully using enhanced oil recovery (EOR) techniques to build its name in the world of tertiary oil production. The company had a fantastic 2018 as well as a solid first quarter.
If oil demand is down so much due to the China trade war and tariffs, how come the more economically sensitive materials, such as copper, have not felt the same economic downward price effects?
Today China has asked it’s refineries to hold off on placing new orders for crude oil imports in anticipation of lower prices once and if demand stalls further. The Chinese buyers have cut off purchases of U.S. crude oil as the trade dispute between Beijing and Washington continues.
- Interest Rates: The 10-year Treasury is hitting around 2.08%, down from 3.25% just three months ago.
- Oil is down around $53 per barrel. Down from about $65 in April.
- Industrial Production has hit multi-year lows.
- Gold and the dollar are moving up.
These four indicators have many forecasting both a tougher time ahead and a rotation into safe havens. The central focus of concern is the trade wars with China and the new tariffs with Mexico.
This week, Durig Capital takes a look at a unique oil and gas producer. California Resources Corporation (CRC) produces oil, natural gas and natural gas liquids (NGL) strictly within the state of California. Most people know that California is one of the largest states (physically) in the U.S. But most probably don’t know that it represents the world’s 5th largest economy. Against this backdrop, CRC produces oil, natural gas and NGLs and sells all of it in the state of California. This looks to be a great situation for CRC – a local buyer for all of its product and a huge appetite for more. CRC, a spinoff of Occidental Petroleum in 2014, has spent the past few years recovering from the oil doldrums of 2016 and it looks to be on the upswing. Some of the highlights from its most recent quarterly results in bullet points above.
- A popular measure of the strength of the U.S. dollar is inching toward its highest level in almost two years, having carved out gains in the past two months. As the greenback marches higher, analysts who predicted its rise in the first quarter, have turned more bearish on bucks, making the case that “the top is in” for the U.S. dollar.
- Trump aims to drive Iran’s oil exports to zero by ending sanctions exemptions that it previously granted to some of the Islamic Republic’s biggest customers.
- Saudi Arabia is ready to start pumping more oil if the United States indeed ends the sanction waivers they granted eight Iranian oil importers last November, citing a source that remained unnamed, but Riyadh will not rush into a reversal of the cuts. It will first examine the effect of the sanction waiver cancellation before it decides how to respond to it.
- Venezuela has the largest oil reserves of any country in the world, with more than 300 billion barrels of proven reserves. In 2011, the country surpassed Saudi Arabia to top the list of countries having the largest oil reserves, but the development of this huge reserves has taken a backseat due to political unrest over the past few years.
This week, Durig Capital reviews a Canadian heavy haul transportation and crane company. Entrec Corporation provides heavy haul transportation and crane solutions to the oil and gas, construction and power generation industries, among others. Entrec’s most recent results for both its fourth quarter and full year 2018 showcase healthy growth in the company’s U.S. operations. And given the volatility in oil and gas late last year, the company’s results are even more impressive.
This week, Durig Capital takes a look at a company that provides compressions services and equipment for the oil and gas industry. CSI Compressco (CCLP) has had multiple successive quarters where the company has increased revenues and its latest quarter did not disappoint. Included with this increase were several other notable achievements.
With the continued demand for LNG and the current and planned LNG terminals in the U.S. and Canada, CSI Compressco looks to be perfectly positioned to take advantage of this demand. In light of the company’s solid performance in 2018, the company’s short-term bonds maturing 2022 are an ideal candidate for additional weighting in Durig Capital’s Fixed Income 2 (FX2) High Yield Managed Income Portfolio, shown below.
Jojoba oil is extracted from seeds of an American shrub which are widely used in cosmetic products. Jojoba oil provides skin protection and prevents aging, resulting in increased adoption of jojoba oil in various cosmetic products such as body lotions, sunscreens, moisturizers, skin cares, lipsticks, and balms.
- Oil dominates Venezuela’s economy, accounting for almost all of its export earnings. Its biggest customers have been the US, followed by India and China. But over the past decade, oil production and prices has collapsed and the country is in a deep economic crisis.
Laboratory furnaces are convection appliances that are widely used across manufacturing and scientific industries for various applications such as annealing, sterilizing, evaporation, polymer treatment, and solvent removal.
The n-hexane market will witness significant demand from end-use applications such as oil extraction, polymerization, pharmaceuticals, rubber processing, adhesive & sealant, industrial cleaning & degreasing and others (Inks, Glues, leather dressing, etc.), according to Persistence Market Research’s report titled “n-Hexane Market: Global Industry Analysis 2013–2017 and Forecast 2018–2026.”
- The President of Venezuela’s opposition-dominated National Assembly Juan Guaido will announce new boards of directors for state oil company PDVSA and its U.S. business, Citgo, UPI reports. U.S. Treasure Secretary Steven Mnuchin said the he’ll hold PDVSA’s proceeds from crude oil sales to the United States, adding that the company could avoid being sanctioned if it recognized Guaido as the legitimate president of Venezuela.
- Saudi Arabia is determined to restore the balance on the oil market and is cutting deeper than required in the OPEC+ deal, with February crude production likely close to 10.1 million bpd, compared to the 10.3-million-bpd ceiling in the production cut agreement.
This week, Durig Capital takes a look at a leading marine transportation company. Teekay Corporation provides marine transportation, storage, and vessel leasing for the oil and natural gas industry. The company’s third quarter saw increases in its subsidiaries revenues over second quarter. Here are some highlights from its third quarter results.
Teekay Tankers nearly doubled its quarterly revenues from the prior year period.
Teekay Corporation recorded adjusted cash flow from vessel operations of $19.8 million as compared to $1.2 million a year earlier.
Teekay LNG revenues increased to $123.3 million as compared to $104.3 million a year earlier.
- Thus far, the Dow has climbed 10.1% from its Dec. 24 low, while the S&P 500 has gained 10.4% from that Christmas Eve low, when stocks put in the worst trading action on the trading day before Christmas on record.
- A partial government shutdown, Treasury Secretary Steven Mnuchin’s questions about banks’ health and signals that President Donald Trump could fire Federal Reserve Chairman Jerome Powell upset markets on Monday, sending the Dow down. After markets tanked on Christmas Eve, Trump said Tuesday that he remains confident in Mnuchin, renewed his criticism of the Fed, accusing it of hiking rates too fast.