- Nearly all men can stand adversity, but if you want to test his character, give him power.
- Abraham Lincoln
New Players
We all know the teams that comprise the energy oil sector. The world has national firms while the US has individual giants. Then, there is OPEC, but it is losing its influence. Teams that are not allowed into the global league are Russia and Iran. There are fringe teams like China, Venezuela, et al.
While we have a fairly accurate amount of barrels produced daily and used daily, the stats change with supply and demand. It is no secret that the Hormuz Strait is central. The US/Israel vs. Iran conflict has damaged global needs. The US policy caused the problem. The initial deficits in oil supply caused a severe shock to the global oil league. However, supply passing through the strait is climbing. It is now 16- million barrels of oil per day (BPD). The old level is 24-million.
Richer nations like the US and China had a national reserve while the remaining nations used their alternative sources. The conflict may continue, but behind the scenes, the smart teams are preparing for the future. We see a new pipeline in the region. Trump is so wrong to be against wind and solar, but that discussion is for another time. There are some "free agents" out there and they will change the energy league in the future.
Enter...
...Amazon has worked three nuclear deals this past year and it is not over yet. They want power for their AI data centers.
Microsoft is pushing to revive Three Mile Island nuclear plant.
Google is seeking partners in small, nuclear reactors. Meta is in the same market.
Beside being tech firms, they have something else in common. A quest for energy, specifically, nuclear. The US energy grid is short capacity. It will need an additional 35 gigawatts of electricity by 2030.
Digress
Amazon signed a nuclear deal with Energy Northwest in Washington. They covered the South with Dominion of Virginia. It made a partnership with X-Energy to build more than 5 gigawatts of new, small nuclear power by 2039. Microsoft signed a 20-year PPA to take all the output of Three Mile Island. This will cover its data centers in Pennsylvania, Chicago, Virginia, and Ohio. These tech firms are developing their own source of power. Soon, their league will have Google and Meta energy firms.
Oil League
OPEC was once its king, but it is no longer number one. The US leads the world in oil production with 13.8 million bpd. and climbing. OPEC is removing its oil cuts. There will be more oil available in the future, but things change quickly. The suggested "toll" on the strait will only cause more conflict. It will not happen. So, where does the price of oil go? The charts indicate a rising price pattern. Brent started at $72 with a recent high at $95. We see some type of consolidation. WTIC, also shows a rising price channel. The low at $67 and its recent high at $92. It too will find a range. This will pertain to demand. The "old" level of 104-105 million bpd is the basis for oil's price action. The conflict is subject to politics. This is never good. There are a few wildcards. China's connection to Iran. Russia supplying oil to China and India and gas to Germany for winter. The new US policy with Venezuela. Politics is never good.
Related
US and world consumers get hurt with rising oil prices. In addition, necessities like food rise through shipping and production costs. The biggest unmentioned costs in the US is mortgage rates. In February, the 30-year rate was 5.99%. On Monday, it was 6.87%. This is 10% higher and consumers pay this rise in cost for 30-years...Peace.
