Top Three Videos – December 19, 2023

Factors influencing oil prices

• The discussion with Rory Johnston covers a wide range of topics including OPEC production cuts, geopolitical risk, and recent M&A deals in the oil market.
• Speculative positions in oil contracts hit a two-year high in late September, contributing to the price increase, but the market’s fundamental tightening was also a factor.
• The recent drop in oil prices can be attributed to the acceleration of pre-existing market moves, leading to a significant decrease from the 90s to the high 70s/low 80s range.
• The 2.2 million Barrel a day cut announced by OPEC really isn’t a 2.2 million Barrel a day cut, but more like 700,000 barrels a day of additional incremental cuts.
• US production has grown significantly, especially after the initial covid period.
• The dominant narrative is that private producers have been growing aggressively to juice up their numbers in order to sell themselves to other producers, leading to challenges with valuations.
• Forecasted US production growth may outperform expectations, raising questions about the impact of shale on the oil market.
• The Guyan production growth has been staggering and historic, despite recent threats to territorial integrity.
• Guyana went from producing no oil to potentially becoming the highest per capita producer on the planet in just five years.

   

Geopolitical impact on oil production and prices

• Controversy surrounds Saudi Arabia’s estimates of peak oil capacity, but they have historically been able to produce more when necessary.
• The United Arab Emirates could produce a million barrels a day more crude if the alliance fell apart, as they have been chafing against the deal and baseline for years.
• The Saudis can punish other oil producers by boosting their own production and lowering prices, leveraging their power and authority within OPEC.
• The risk of Venezuela attacking floating production vessels off Guiana’s waters could have significant implications for oil prices.