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NIGERIAN NEWS

PRAISE SINGERS  GO TO "GREET" NEW  GMD NNPC

PRAISE SINGERS GO TO "GREET" NEW GMD NNPC

04 August 2019

If journalism is to have meaning, to fulfill its raison d'etre, then it must be about speaking truth to power; giving a voice to the voiceless. The National Chairman of...

IS IT A NIGERIAN GAS FLARE COMMERCIALISATION PROGRAM ?

IS IT A NIGERIAN GAS FLARE COMMERCIALISATION PROGRAM ?

31 July 2019

The Nigeria Gas Flare Commercialisation Programme (NGFCP) is a prime example of a project well concieved but poorly executed and unlikely to achieve most of its objectives despite its inherernt...

VR CAPITAL BUY 25% OF P&ID AS NIGERIA FACE $9BN FINE

VR CAPITAL BUY 25% OF P&ID AS NIGERIA FACE $9BN FINE

05 June 2019

First, a health warning. This article is about recalcitrant, inept and quite possibly corrupt Nigerian politicians and government ministers. It is certainly about incompetence and misconduct in public office. It...

DISASTER AS UNEMPLOYMENT LEAPS BY 30%  TO 20.9m

DISASTER AS UNEMPLOYMENT LEAPS BY 30% TO 20.9m

29 May 2019

Nigeria is sleepwalking into a disaster which has the potential to unleash instability, insecurity and crippling hardship. Unemployment is always a cause for concern, it is the clearest indication that...

 NIGERIA NGIGE UNDEREMPLOYED OR UNEMPLOYABLE?

NIGERIA NGIGE UNDEREMPLOYED OR UNEMPLOYABLE?

08 May 2019

Working on the assumption that the Minister of Labour and Employment, Senator Chris Ngige has not been misquoted it is difficult to understand his recent pronouncement and what now seems...

NIGERIA ANOTHER MOU ANOTHER DAY

NIGERIA ANOTHER MOU ANOTHER DAY

01 May 2019

Nigeria has announced ambitious plans to double its oil production by 2025, targetting 4 million bpd in six years’ . Maikanti Baru, Group Managing Director at the Nigerian National Petroleum...

NNPC REFINERY WOES 2019

NNPC REFINERY WOES 2019

24 April 2019

The Nigerian Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has not unpredictably, stated that Nigeria’s continuous subsidy of petrol consumption means the Nigerian National Petroleum Corporation (NNPC) will...

NIGERIA OPEC STAND FIRM

NIGERIA OPEC STAND FIRM

28 March 2019

Nigeria and other member countries of the Organisation of Petroleum Exporting Countries (OPEC) as well as their non-OPEC allies led by the Russian Federation have said they are committed to...

PALM OIL PRODUCTION UNDERPERFORMS

PALM OIL PRODUCTION UNDERPERFORMS

18 March 2019

PALM OIL PRODUCTION A MEAGRE PERFORMANCE Nigeria from gaining a substantial share of the global oil palm industry now worth $62 billion annually, casting doubts on government’s ability to grow...

NIGERIA REFINING THE VISION

NIGERIA REFINING THE VISION

18 March 2019

NIGERIA REFINING THE VISION Nigeria is the only OPEC member country that imports gasoline (PMS) and holds the dubious distinction of being the largest importer in the world. The Nigerian...

IS THE PGB FATALLY FLAWED?

IS THE PGB FATALLY FLAWED?

18 March 2019

IS THE PIGB FATALLY FLAWED? Ten years after the Petroleum Industry Bill began its tortuous odyssey which has included the Bill being broken into four portions, both houses of the...

CBN PUMP UP THE T-BILLS

CBN PUMP UP THE T-BILLS

18 March 2019

CBN PUMP UP THE T-BILLS The Central Bank of Nigeria (CBN) plans to raise a total of N1.809 trillion from the debt market, in the first quarter of 2019.This is...

TIN EXPORTS NIGERIA

TIN EXPORTS NIGERIA

17 March 2019

TIN EXPORT NIGERIA Synterra are able to export high grade tin ore from Nigeria. We agregate the Mining production of a number of artisanal miners and consolidate volumes for exportSynterra...

BERYLLIUM MINING OPPORTUNITIES

BERYLLIUM MINING OPPORTUNITIES

17 March 2019

The Nigeria Solid Mineral and Mining Sector has in effect made the great leap forward which will now allow investors to take advantage of the vast mineral potential Nigeria possess....

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Sunday, 23 June 2019 19:49

IRAN DOWNING OF US RQ-4 GLOBAL HAWK DRONE ONLY MOVES OIL PRICES MODESTLY

Written by

In an action which bought  the simmering tension between Washington and Tehran to boiling point the shooting down of a US Spy drone RQ-4 Global Hawk in the Persian Gulf would have normally sent crude oil prices  spiking as the market sought to price in the anticipated  loss of crude from the market in geo political price risk premiums. The  Persian Gulf provides around a third of the world’s oil, with most of it passing through the narrow Strait of Hormuz

Yet although crude oil benchmarks rose modestly by about 5% off the back of the strike, Brent Oil was trading at about $65 a barrel on Friday morning. That in stark contrast to  recent highs of about $72 a barrel in mid-May. Though Brent price increased +$3.19 to $65.20 there was  almost no change in the  term structure.

The market has reacted as it generally would to a short term supply disruption and that is because  a shale driven  boom in oil and natural gas production in the United States as reconfigured the  world oil markets.

 THE RISE OF SHALE

In the last decade, the United States has increased production by about six million barrels of oil a day, the equivalent of the combined production of Angola, Nigeria and the United Arab  Emirates. Canada, too, has seen its oil output surge, up 8.5 percent last year.

This  growth in shale production has weakened OPEC’s hold on the oil markets and redefined the risk calculus as supplies from the United States make their way into the global market. This was always OPEC’s worst case scenario for shale and US production.  Whilst not yet being energy independent the US relies a lot less on crude oil supply from the Persian Gulf. In fact  about 65% of all crude  passing through  Strait of Hormuz is destined for   China, India,  Japan, South Korea  and  Singapore.  

OPEC TO CUT DEEPER

OPEC along side Russia have resorted to production cuts to balance the market with some degree of success. It now looks increasingly likely that those cuts will be extended when they meet in Vienna in July. OPEC’s premonition has come true as shale production has unbalanced the market despite OPEC record low May production.

US-CHINA TRADE BEAR

There are substantial fears that oil demand growth is slowing and the China US trade war will see further demand destruction and less call for oil as inventories surge with oversupply. The predominant sentiment is of a prolonged bear market. Many commentators, this one included see the US-China trade war as a protracted and complex struggle which is more than simply trade war. The best we can hope for in the near future is an agreement which serves as a pause, however unlikely.

 

Tanker charter rates have ticked up substantially over the last week, hitting about $28,000 a day for chartering the largest class of tankers. Insurance premiums for shipping in the gulf have also risen. Though tanker operators have been disappointed that prices have not risen even higher; in late 2018, the operators were able to charge about $50,000 a day.

“Rates have increased some, though not as much as many had thought or even hoped for,” wrote Fearnleys, an Oslo-based ship broker, in a report published on Wednesday.

STRAITS OF HORMUZ

It seems The market has factored in that there has not been a  supply disruption.    A black swan event could roil the markets, ultimately it is unlikely as blocking the Straits of Hormuz is in no ones interest including Iran, which still exports what oil it can through the Gulf   21 million barrels pass through this strait daily it has never been blocked and the United States cannot allow it to happen.

The United States has shown in the past that it is willing to go to great lengths to keep the sea lanes open. In the 1980s, for instance, after dozens of ships were damaged during the conflict between Iraq and Iran, navy vessels from the United States and other countries escorted tankers through the area.

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