Tullow Oil Share Discussion Threads

[master rsi] 05/1/2020 21:06

What will happen to oil if there is another war?
Nell Mackenzie - BBC Business reporter - 3 January 2020

Mitch Kahn remembers how, when fighting began in the second war in Iraq, prices for US crude oil spiked $10 per barrel overnight.

That would have meant a profit of $50,000 if a trader had made the smallest purchasing trade possible. Or, just as big a loss if the trader had decided to sell.

Mr Kahn was working as an independent trader on the New York Mercantile Exchange (NYMEX) on Vesey Street in downtown Manhattan, where crude oil, gas and heating oil were traded downstairs and precious metals were traded upstairs.

In 2004, when the second war in Iraq broke out, prices were decided by open outcry: the shouts and yells of (mostly) men who stood in a ring. Some bought, some sold, the price settled between what sellers and buyers were offering.

The ring got so loud that several traders wore earplugs, Mr Kahn says. But for him, the adrenaline was enough to keep his hearing clear.

While trading today is 24-hours, in 2004, when the bell buzzed at 14:30 EST, the market shut.

Image copyrightGETTY IMAGES
Image caption
Oil traders on the floor of the New York Mercantile Exchange
That day in 2004, when the market opened, the trader on his right began to shout.

He remembers the trader next to him trying to sell some oil, "and the market collapsed."

Within minutes, a barrel of oil was $20 cheaper. But that is less likely to happen today.

"Markets move differently now," he says.

In fact, Mr Kahn points out, despite Friday's price spike, everything about the oil markets are different today than the last time war started in Iraq.

Places it is produced, the way it is refined and how it is traded bear no resemblance to oil he was working with when his adrenaline carried him through screaming price moves of the past.

The rules have changed
The price of Brent crude vaulted more than 4% to hit $69.50 a barrel on Friday.

Oil prices swung on news that Iranian General Qasem Soleimani was killed in a US drone strike at Baghdad airport, which the Pentagon described as "defensive action".

Stock prices of BP and Royal Dutch Shell both rose around the 1.5%.

The single biggest factor that changes the game in oil from 2004 to now, says Michael Widmer, a commodities strategist at Bank of America, is that the US makes enough oil to be independent.

The US is no longer reliant on crude from the Middle East.

"The rules have changed materially," says Mr Widmer.

The drone attacks on the Saudi Arabian oil plants in September serve as a good example.

The attacks temporarily knocked out half of Saudi Arabia's crude oil production
"This is one of the biggest ever hits to the global oil market, in terms of supply and it had no sustained impact," he says.

That day the market surged almost $10 a barrel, but not much happened in the aftermath.

While tensions rose on the political scene with terse rhetoric flying between Iran and the US and a plan to deploy new sanctions, oil slid back down to below $60 a barrel a fortnight later.

But the sour political discourse outlasted any fears of price disruption.

That is because more countries, notably Russia and the US, are pumping out oil now.

Opec, the cartel of mainly middle eastern countries which used to control much of the supply of oil, no longer holds the same sway.

"Now when Opec cuts its production numbers, it just makes more breathing space for other countries to increase theirs," says Mr Widmer.

Alan Gelder, head of Wood Mackenzie's marketing and research team, says one way to look at it is that Opec used to produce half the world's oil, but now makes less than a third of it.

In the Gulf War, which began in 1990, oil came from two places. Either it was made by Opec, or it was produced in places considered expensive and risky, like the North Sea.

Finding oil and getting it out of the ground from the ocean, especially 40 years ago, was an unpredictable and dangerous affair.

"Back then, commodity markets were just getting established. There are lots more participants in the market now," says Mr Gelder.

And far more information is available today than it was five years ago, he adds.

When Saudi Arabian producers were attacked last September, satellite imagery of ships leaving port and the plants themselves, showed that production restarted quickly and exports had resumed.

"Years ago, people would be frantically calling one another, trying to figure out what was going on," he says.

At the moment Opec and other oil producing companies like Russia have agreed to hold back on pumping out as much oil as they can.

That makes it particularly difficult to know what will happen to the price of oil as tensions rise in the Middle East.

In the short term, analysts at Citibank expect prices to stay high on retaliation fears.

Attacks on US oil company pipelines, or where Western and American oil companies have invested in new exploration, would drive crude higher.

Any resolution of the conflict between Iran and the US will de-escalate the situation and prices will deflate, they say.

[jimarilo] 05/1/2020 19:46

Nice people in Iran, this is what they do to people for being gay.



Baghdad? Tehran? No, Maida Vale, London. They miss #Soleimani so very much. Proper Londoners, Khan-style.

[sentimentrules] 05/1/2020 19:44

They want war. Every president is entitled to one.

Wti 40 bpb before election

[master rsi] 05/1/2020 19:42

US warning of attacks on Saudi oil facilities - Bloomberg
"State Department warns of attacks on Saudi oil facilities"

Today's stating the obvious but that's just one angle for the Iranian's.
Blocking the Strait would cause havoc and bring a number of middle east
oil producing countries into the turmoil.

I think Iran will seek to drag other countries into this as it's the only way they can place
pressure on the US as would create an uncontrollable situation with many unknowns.

Going to get very ugly before it gets better and that's going to drive oil prices much higher.

[leoneobull] 05/1/2020 19:30

mt150Posts: 637Price: 60.00No OpinionRE: It's a waiting game...Today 14:03It is the first full trading week of the year so it is possible it could rise a fair bit this week especially with the Oil price spiking since Friday

[leoneobull] 05/1/2020 19:26

ColonelDrakePosts: 2,226Price: 60.00No OpinionUS warning of attacks on Saudi oil facilitiesToday 18:32"State Department warns of attacks on Saudi oil facilities"Bloomberg article today stating the obvious but that's just one angle for the Iranian's. Blocking the Strait would cause havoc and bring a number of middle east oil producing countries into the turmoil.I think Iran will seek to drag other countries into this as it's the only way they can place pressure on the US as would create an uncontrollable situation with many unknowns.Going to get very ugly before it gets better and that's going to drive oil prices much higher.

[sentimentrules] 05/1/2020 19:20

And everyone will run to BP

[leoneobull] 05/1/2020 19:19

ColonelDrakePosts: 2,226Price: 60.00No OpinionRE: WowToday 10:53Several key differences today from the issue that occured at Saudi Terminal back in Sept.1. Oil market has tightened a great deal since then and expected to rebalance completely in around 6 months time.2. The Saudi issue was dealt with in under two weeks and most of the supply disruption lasted less than 7 days. Saudi's also briefed the Media well on events providing clarity.3. The issue that could really frighten the oil market is an all out disruption across multiple Oil production and infrastructure targets in Middle East region. As an example, Iran could close / block the Hormuz Strait. That would crippled oil exports and rive oil price past $100pb with ease.4. Iraq is Iran's playground. They rule the roost there. So they could target Oil in Southern Iraq which has many US oil majors.5. Bombing the Saudi export pipelines as per September last year is an obvious go to for Iran.6. Bombing oil tankers as they did last year (apparently).7. Cyber warfare. Could hit systems which process oil sales/transactions and other related comms.US shale production has slowed dramatically over the last year. They don't have a great deal of capability to add to production and are currently in a phase of just supporting production as many wells begin to retire swiftly. New wells are quick to come on line but they are just replacing the dying wells.Russia certainly has some capacity to add more production as do the Saudi's assuming neither are disrupted. But that's the risk here now - no one knows what could happen next and everyone is waiting for Iran's next move.One thing is sure, this Iran US issue will not be over in a few weeks. It will likely be fought via proxy in iraq/syria and Oman/Yemen which is effectively what's been going on for years now. But this time, the anti looks set to major threat levels.In a scenario like this, the market hates uncertainty. There's no way the market can price Oil without a premium of risk added in at present. And at $63pb WTI, there is zero risk priced in. At $70 WTI there's 10% risk factor priced in. In an all out war situation which could involve Israel, Saudi's, Iraq, UAE and so on... $150pb on Brent would not be out of the question. In fact $200pb is possible especially as we live in a day and age whereby the markets do extremes.Tullow would be back above 200p+ if oil were to trade up past $90pb even with just 70kbopd. That etc $30pb premium is transformational to majority of oil producers out there as it's all pure profit.This Iran issue has just got started so if you think PoO is just going to ripple along like a millpond... think again. A storm is coming and the market has not priced in the risks as yet

[sentimentrules] 05/1/2020 19:02

Needs to hit 850 bucks pb for tullow

....

It does dex

Long or short. . That makes sense either way as far as business goes

[dexdringle] 05/1/2020 19:02

"engaging positively with the communities located around its blocks, keeping the Kenyan government ‘on side’, while avoiding being caught up in internal politics"

Sounds eminently sensible to me.

[master rsi] 05/1/2020 19:00

The Sunday Times:

Oil prices are forecast to be higher than expected this year for a sustained period, following the drone
killing on Friday of Major-General Qassem Soleimani.

Analysts warn of further tensions and hostilities in the Middle East following the killing of Iran’s
top general, which, according to Oxford Economics, “will keep the oil price premium elevated”. .........

[yidarmytom] 05/1/2020 16:52

nothing untoward about this

[sentimentrules] 05/1/2020 16:18

In fairness that's just smart business. Reckon all do it, or should

[teamwork1] 05/1/2020 16:10

https://www-standardmedia-co-ke.cdn.ampproject.org/v/s/www.standardmedia.co.ke/mobile/amp/article/2001355357/tullow-link-to-disgraced-uk-firm-emerges?amp_js_v=a2&_gsa=1&usqp=mq331AQCKAE%3D#referrer=https%3A%2F%2Fwww.google.com&_tf=From%20%251%24s&share=https%3A%2F%2Fwww.standardmedia.co.ke%2Farticle%2F2001355357%2Ftullow-link-to-disgraced-uk-firm-emerges

[sentimentrules] 05/1/2020 15:54

Shorters value.. up is more for the bear. He will welcome you with a sharp toothed grin

[yidarmytom] 05/1/2020 15:51

Hear Hear!! couldn't agree more.... this is going up this coming week IMO

I would say IMHO but IMO, there's no H

[nerdofsteel] 05/1/2020 15:50

he left off the + sign

+21p this week = 81p by Friday which I happen to agree with

[sentimentrules] 05/1/2020 14:56

Einstein should have said "always look for easier return"

[turvart] 05/1/2020 14:54

Einstein once quoted "Doing the same thing over and over is just Insanity".

That Quote applies to this stock IMO.

[turvart] 05/1/2020 14:46

With the fact Master RSI keeps repeating the same mistakes over and over daily that he does not understand about trendlines or the trendline channel is just beyond me?

Einstein once quoted "Doing the same thing over and over is just Insanity".

[turvart] 05/1/2020 14:42

What you lot need to remember is the fact Whites123 is posting in this stock, so don't get too smug with your comments!