However, while jawboning may have a near-term impact on pricing, fundamentals will eventually dictate the price and they are creating an excellent opportunity for investors.
Outside the United Arab Emirates and Saudi Arabia, there is little to no spare capacity coming out from the Organization of the Petroleum Exporting Countries , with some pundits saying the cartel is producing more than 2.5 million barrels a day less than what it claims. Then there were uprisings last week in Iraq, OPEC’s second-largest producer, following the resignation of an influential cleric that couldn’t come at a worse time.
Some states such as California are still proceeding with plans to ban the sale of gasoline vehicles by 2035 despite providing no evidence on how its natural-gas-fuelled electrical grid will support this transition. Fortunately, oil from the U.S. Strategic Petroleum Reserve has helped put a Band-Aid on this supply shortage. In particular, the U.S. did a good job of releasing the grade of oil sufficient to meet refinery demand, with 85 per cent of the oil sold by the SPR being medium sour.
ICYMI ⬇️ cc CarmichaelKevin finance oilandgas
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