A list of the most pertinent questions facing the oil market would look something like this:
Will the ending of US waivers for buyers of Iranian crude drive the country’s exports to zero? Are there other producers who might increase output to replace lost supply?
How significant have US sanctions against Venezuela and Iran been?
Have crude inventories been rising or falling so far this year? Which countries and regions have seen the biggest changes? Has China been a driver in the oil market of late?
What is the outlook for US shale growth? Are pipelines being constructed at a fast enough pace to relieve bottlenecks depressing regional prices in West Texas?
All big question with major implications for oil prices. These are also questions we’re trying to answer using proprietary data derived from satellite imagery.
Intrigued? If you’re in the energy business, and happen to be in Houston on May 13, we’d love for you to stop by a reception we’re hosting for clients and friends.
For details and RSVP, please click here.
We’ll be discussing insights we’ve gleaned from our data and how it relates to the oil market.
Here are a few examples:
All the talk for 2019 so far has been around the loss of supply from OPEC -- both voluntary and involuntary.
One of those OPEC members experiencing “involuntary” supply cuts has been Venezuela, reflecting the cumulative weight of internal turmoil and US sanctions.
The impact has been acutely felt in the Caribbean, which for decades has served as an extension of Venezuela’s oil industry.
Without the usual supply arriving, storage in the Caribbean has fallen sharply. In fact, outside of OPEC members, the drop in the Caribbean stands out as the largest in 2019 year-to-date.
The graph below shows the change in crude inventories among countries outside of OPEC. The Caribbean emerges as the place with the largest year-to-date declines, on a percentage basis.
Illustration Credit: Christina Wessel/Ursa
As for Iran, US sanctions came into full force last week after Washington refused to renew exceptions given to eight countries (five of whom were still buying Iranian crude).
If President Trump succeeds, driving Iranian exports to zero, that will mean more than 1 million barrels per day (bpd) wiped from global supply.
But that won’t happen without a fight. Iran has vowed to sell its oil in the “grey market,” skirting US sanctions to preserve its major source of revenue.
The epicenter will be Kharg Island where Iran exports the vast majority of its crude.
Inventories have been volatile the last few weeks leading up to the May 1 expiry of waivers, according to our measurements (see graph below).
Source: Ursa, Spire
Being Houston, we’ll also dig into the latest on the Permian Basin looking at the impact of inventories on the Midland-WTI spread, the status of major pipelines under construction and upstream trends.
Hope to see you May 13th in Houston. You can RSVP here.