Cease Fire Talk. The Energy Report 10/25/2024

US Secretary of State Blinken should be apologizing for the public disclosure of highly classified intelligence documents describing Israel’s preparations for a retaliatory strike on Iran. That reportedly put off the timeline of Israel attack and has allowed Iran to get better prepared and try to gather up support from allies like China and Russia, which happened. Blinked did say that, “I hope Iran is getting message very clearly that any further attacks on Israel fundamentally risk its own interests.” I think Iran is getting the message that the Biden Harris administration is weak and they can continue to do what they have been doing. They can try to assassinate a former US president with no consequences. Iran can continue to fund terror operations of Hamas, Hezbollah and the Houthi rebels with no real consequences. They can fund this because the Biden Harris administration has supported Iran and has not enforced sanctions on the world’s biggest state sponsor of terror. They have enabled Iran and they continue to do so.

The Federal Foundation for the Defense of Democracy pointed out earlier this month that the Energy Information Agency (EIA) published its first report about Iran’s petroleum exports as mandated by the Stop Harboring Iranian Petroleum (SHIP) Act enacted earlier this year. The EIA reported that Iran sold $144 billion in the first three years of the Biden administration, $100 billion more than what Tehran exported in the last two years of the Trump administration when the oil sanctions were in effect. The SHIP Act required the EIA to provide data on Iran’s total petroleum export volume and revenue and a breakdown of how Iran sold to China and other countries and at what price. Finally, it sought an analysis of Iran’s labeling practices of exported petroleum and petroleum products, and a description of companies, ships, and ports involved in the export and sale of Iranian petroleum and petroleum products.

The report confirmed what critics of current U.S. policy have been saying: During the Biden administration, Iran’s petroleum exports have increased in value and volume. The report found that between 2021 and 2023, Tehran sold $144 billion of petroleum and petroleum products. This contrasts sharply with the “Maximum Pressure” period, during which Iran’s oil exports declined to just $16 billion in 2020. The trend has been both broad and consistent.

Crude oil and condensate exports more than tripled between 2020 and 2023 to more than 1.59 million barrels per day. Iranian petroleum product exports increased more than 50 percent over the same period.

The Biden administration argues that it has been enforcing the sanctions, but the EIA suggests the opposite. The administration might have been worried about the effect on the price of oil of fully enforcing the sanctions. However, other producers had spare capacity to offset the rise in the volume of Iranian exports had the administration enforced sanctions.

Iran currently exports around 1.7 million barrels per day (mbpd) of crude oil. OPEC’s effective spare capacity — excluding Iran, Russia, and Libya — is currently above 5 mbpd. ET Energy World reported that India’s oil demand is forecasted to grow by 3.5 Percent to 4 Percent year over year.

Oil prices are still trying to build the base under 70. We’ll have to see how the day ends and whether there’s going to be any more headlines that can drive this market up or down. Well, I think I would have to feel very comfortable with owning oil in this area.

The natural gas market got a big surge yesterday partly on weather and partly on a report from the Energy Information Administration that showed that US natural gas fell for the first time in 24 years. The EIA said that US. natural gas production from shale and tight formations, which accounts for 79% of dry natural gas production, decreased slightly in the first nine months of 2024 compared with the same period in 2023. If this trend holds for the remainder of 2024, it will mark the first annual decrease in U.S. shale gas production since we started collecting these data in 2000.

Total U.S. shale gas production from January through September 2024 declined by about 1%, to 81.2 billion cubic feet per day (Bcf/d), compared with the same period in 2023, while other U.S. dry natural gas production increased by about 6% to 22.1 Bcf/d. Total U.S. dry natural gas production from January through September 2024 averaged 103.3 Bcf/d, essentially flat compared with the same period in 2023.

The decline in shale gas production so far this year has been driven primarily by declines in production in the Haynesville and Utica plays. From January through September 2024, shale gas production decreased by 12% (1.8 Bcf/d) in the Haynesville and by 10% (0.6 Bcf/d) in the Utica compared with the same period in 2023. At the same time, shale gas production in the Permian play grew by 10% (1.6 Bcf/d). Production in the Marcellus play, which leads U.S. shale gas production, remained flat.

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