American oil (WTI) is below $80/barrel, and European (Brent) is around $85. Natural gas prices dropped almost 4% today.
Business is going to be using less energy down the road.
Fewer businesses. Less products. It just doesn’t require
as much energy.
Disrupted markets have a funny way of causing mass
disturbances in the force.
Russia is inherently not competitive on price, due to the nature of their deposits, their harsh climate and the long distances to port. Their breakeven was somewhere in the $50’s per barrel before the war.
Even once it is loaded on ships, Russian oil is mostly much further from major markets (outside of Europe), and now faces significantly higher transaction costs, like insurance, as well as those large transportation costs.
Even if prices stayed far above their Pre-COVID norms (which now does not seem likely), there are not enough tanker ships in existence to take the rest of the oil that Europe imports from Russia, on the longer trips to Asia - especially not enough arctic ice rated tankers.
On December 5th, Europe stops accepting oil tanker loads from Russia, and their export volume is going to take a hard hit, no matter what discounts they could offer. Currently, European buyers are still legally stocking up on Russian oil tanker loads, but that will end precipitously in December.
As prices drop back to their pre-COVID, pre-war norms, Russia’s breakeven price is now even higher than before. Russia is going to have to absorb the bulk, if not all, of the reduction in global demand during this developing recession. As Indian buyers are showing already, we won’t have to wait till December for that.
Russia is screwed.
Excited to learn how Putin is really a genius for the 9000th time (Russia is Venezuela in the arctic).
Global recession coming. Oil and nat gas prices going down.
What Modi said to Putin off-mic:
“Need better discount!”
Trying to be objective here — The outlook for gas prices this winter is not so great, however. From the same source:
https://oilprice.com/Energy/Energy-General/A-Natural-Gas-Shortage-Is-Looming-For-The-US.html
This has been in the making ever since Brandon took office. Pubs need to hang Biden and his ilk out to dry on this one.
Do any of our petro business types on FR know why rigs are reduced in the Permian?
https://oilprice.com/Energy/Energy-General/A-Natural-Gas-Shortage-Is-Looming-For-The-US.html
A coal power plant near me just went offline for good recently, too. 3 years ahead of schedule. No reason given.