Iran/Israel Strike Up Inflation?

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Israel-Iran: A strike on oil assets could revive inflation

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Michael Tanner: [00:00:10] What’s going on, everybody? Welcome into the Monday, October 14th, 2024, edition of the Daily Energy News. Beat Stand Up. Here are today’s top headlines. First up is rule Iran conflict. A strike on oil assets could revive inflation. Ooh, spooky stuff, guys. Next up, UK gas production is declining faster than expected. Lobby warns. Who would have guessed raising taxes would lower gas production? Definitely. You expect that if you listen to our show, then we will jump over. I will quickly cover what happened in the oil and gas markets and then touch on rig count. Stu is out on assignment, so I am rocking a solo show today. Let’s go ahead and kick this off. [00:00:54][43.3]

Michael Tanner: [00:00:54] First up, here we go. Israel-Iran a strike on oil assets could revive inflation. As you guys remember, last week, Iran launched in kind of a tit for tat retaliation. About 180 ballistic missiles not causing that much damage. But we did see Israeli President Benjamin Netanyahu warn that, quote, Tehran has made a big mistake and would pay for it. This goes back all the way to April when I ran first launched about a 300 drone and missile attack. There was a limited counterattack from Israel on that point. Unfortunately, what we’ve now heard out of Israel, maybe not, unfortunately, but maybe if if if we’re talking about oil prices or inflation, then, yes, Israel has vowed a, quote, significant retaliation. I’m going to read straight from the article here fueling speculation that Israel could target Iran’s oil, military and nuclear infrastructure. I think some of the stuff that we’ve heard recently, they’re steering away from nuclear, but they’re leaning in to the oil, which is, again, if you like, high oil prices, then yeah, because we will see oil prices tremendously shoot up. I’ll read now straight from the article again, Netanyahu is under intense pressure from senior Israeli officials, including former Prime Minister Lapid, to strike Iran’s, quote, most painful target, while U.S. President Joe Biden has called for calm, saying October 4th, he would think about alternatives to striking Iranian oilfields if he were in Israel’s shoes. Thank goodness he is not. I mean, really, since the day we got to go back and look, even after this happened, we saw oil prices and specifically Brant prices up about 17% week over week, even though we’ve now seen them ease a little bit. You know, there’s a couple different critical Israeli oil assets that could be hit that somewhere, if you read reports, could be somewhere around 2 million barrels per day. And if that were to happen, I mean, we would clearly see triple digit oil. The last time we did see $100 oil was shortly after Russia decided to invade Ukraine in February of 2022. Here’s a quote from Biraj titled Rob, chief commodities analyst at Swedish bank Seb. He was on CNBC last week. Quote, If you strike, if Israel takes out oil installations, Iran, you could easily see oil prices go to 200 plus. Holy smoke. Okay, so the real question is what exactly are these oil fields that they may or may not hit? Okay. So obviously, you’ve got Kharg Island. It would be the most crippling. It’s really home to their major Iranian oil export terminal. It’s about where most of their oil goes in terms of to be exported. It’s located the Persian Gulf, about 40 miles off the or excuse me, 40km. We’re talking international, 25 miles off the array off the Iranian coast. It has handles about 9/10 of their oil exports, which is unbelievable. You’ve got other targets as you’ve got the Pandya Abbas oil refinery located in the southern Gulf port city by the exact same name. That refinery does about 400,000 barrels a day and is really key to Iranian domestic consumption. So if you’re trying to cripple them in Iran, maybe that’s what you’re looking for. You know, again, if you they attack refineries, we probably won’t see oil prices shoot up as much as if they did end up attacking Kharg Island. They also something else that could be under attack is the South Bronx gas field located in the Gulf. It’s the world’s largest natural gas field that they share with other South Bronx kings, about 8% of the world’s natural gas reserves. And it’s a major revenue source down there for Iran. When it comes to the LNG export market. We also have the Bushehr oil terminals, which are located pretty close to a nuclear plant that bears the same name. So if they did want to basically hit two birds with one stone, maybe that’s the place we go. It could be interesting. All I know is I think the market is setting up and prepping itself for that. You know, we’re sitting at $75 oil now. As you listen to this Monday morning, I mean, it could be $100 that they decided to take out any one of these facilities to start the week. I do think that, you know, what they do will be limited in its oil price inflation capacity. And basically what this ought of, you know, from my perspective, I think they’re more likely to hit gas fields. I think they’re more likely to refining capacity. I doubt they go out and actually go in and go out and just completely take out Kharg Island, if only because I don’t think they want to. Dollar oil. I do think that’s a little bit. I don’t think it’s going to be $200 oil per se. If that does happen, you might see 120, maybe 130. But again, I don’t know if that’s necessarily going to happen. But I think this article is pointing out, as you know, that this would come at a very fraught time for both the Biden administration should say the Biden-Harris administration and the current political climate in terms of, you know, running for president. If all of a sudden we do see for an extended period of time, 90, 95, $100 oil, that’s only going to continue to exacerbate the inflation that we’re already seeing. I saw 250 gas outside just as I was driving home earlier. I mean, that’s great. We can that can work for everybody. I mean, it would be nice if it was lower, but that that’ll work if all of a sudden you get to that $354 range, especially here in Texas. Yeah. It’s it’s going to continue to continue to to hurt. So I think the whole world is kind of watching what happens and then depending on where they actually decide to go ahead and hit, you know, again, if it’s if it’s car island, well, you know, then we will see it. I me personally I doubt it is that. [00:06:12][317.4]

Michael Tanner: [00:06:12] Let’s move to the United Kingdom. Their gas production is declining faster than expected, according to the oil and gas lobby there. That’s the UK, where Offshore Energy’s UK ADR intelligence manager output is down about 13% this year. And you know why is that, you might ask? Well, windfall profits task again. I want to read a couple sentences straight from the article here. Britain’s natural gas output is declining faster than expected and leading to greater reliance on imports. Who would have thought of that? According to an industry group seeking government relief to spur investment, production was down about 13% this year through August on an overall annual basis, and the similar rate is possible for all of 2024, according to Offshore Energy’s UK. That was only a 10% decline was forecasted earlier this year for the North for the UK’s aging North Sea. Here’s a quote. We should be a little bit worried about output from the basin and faster decline rates, he said in an interview. This is not a huge there’s not a huge amount of new production coming through. Well, you know, and what’s pretty crazy is if you go back over the last 15 years, there are natural gas production has halved. So you’re talking about no new investment in oil and gas is is basically happening right now in mainly off on this offshore gas that’s it’s pretty interesting reminding everybody listening that the UK implemented a new tax system that was basically a windfall profits tax which basically was a 25% hit on all profits on top of profits, relatively on top of all the other taxes for oil and gas producers that we’ve seen an absolute. BP has talked about possibly moving their headquarters to the United States in order to possibly stave that off. It’s pretty unbelievable. And the funny part is and now they’re having to import it from where you might ask. It’s a variety of places, but my guess is some of it’s coming from Russia and they would rather buy non produced UK natural gas, which is probably done more responsibly than anywhere else in the world besides the United States. I think that’s the crazy part, is that if anywhere is going to produce the lowest carbon output natural gas, it’s probably United Kingdom because they probably have a bunch of regulations. I think that’s the funniest part. You think they care in Russia about the carbon efficiency of their operation? Do you think they care about that in Iran, Saudi Arabia, UAE, Qatar, anywhere? You know, they don’t. Sorry. It’s just because they don’t care. Their goal is to produce it for as cheap as possible. So instead of taking their domestic resources, which they could do more sustainably, they’re going to go now cut their domestic production, making them more reliant foreign, bringing them less national security. I mean, it’s just unbelievable. I feel sorry for you if you’re in the United Kingdom because you will start experiencing energy inflation. It’s already happened. We know that. And it’s only continue to get worse because you have an idiotic, idiotic gov’t. [00:08:57][164.8]

Michael Tanner: [00:08:57] Let’s go ahead and just jump over into finances guys. But as always, we need to pay the bills here. Thank you for checking out the world’s greatest website www.Energy News Beat.com. The best place for all your energy and oil and gas news Stu and the team. Do a tremendous job making sure that website stays up to speed. Everything you need to know to be the tip of the spear when it comes to the energy and the oil and gas business. Go ahead and hit us up in the description below for all links to the timestamps. Links to the articles. You can also hit us up on substack. The Energy News [email protected]. We’re also heading in the tax season, folks. So if you are a high net worth individuals who are looking to get into the oil and gas business and officially call yourself an oil man, we have a great, great offering for you. Invest in oil.energy news beat.com we do all the information you need to know about how to partner with us on our direct working interest project that we are doing with our good friends over at the Crude Truth and Pecos Country Operating guys. Again, if you’re cutting a check to the government for taxes, shame on you. Shame on you, in my opinion, because there are ways to mitigate that tax burden. Oil and gas investing is a great one because you also truly get what is kind of known as that passive income you don’t have. No one’s going to ask you to show up, you know, and change out toilet paper. No one’s going to ask you to come clean the floors. All you’re going to do is hold. If you pick a good prospect, strike oil and start receiving both the tax benefits and also some true passive income. It’s a great, great investment if you’re looking for it. Again, invest in oil.energynewsbeat.com for all the information. We will get that to you right away. [00:10:23][86.1]

[00:10:23] Let’s go. His dive in here the markets will be pretty spicy day on Friday. S&P 500 was up about 6/10 of a percentage point. Nasdaq was only up about one tenth of a percentage point two and ten year yields fairly flat to ten year yields was actually up a full percentage point, a dollar index basically flat. Bitcoin still hovering around $62,000. Crude oil actually dropped for the day, 75 at 56 with looking to be that open somewhere between 7549. But as you guys listen to this, on Monday, you know, we don’t know what’s going to happen. It could be it could be crazy. Brant Oil was basically flat still at 78, 97. Natural gas down 1.6 percentage points, $2.63. That’s its second straight week of losses. You know, oil was up on a week to week basis, was up about one percentage points. I think, again, what people are worried about is what’s going to happen. But, you know, what’s Iran’s excuse me, Israel’s response to Iran’s attack last week, they’re going to do something. The question is, is what? We did also see Libyan oil production buoys basically restored to three central bank crisis levels. You know, again, I think I thought we told you this for weeks. So if you were if you were counting on Libyan oil production to be off for a while, you’re an idiot. So from from look, this and when I say idiot, I’m talking directly to routers who for some reason thinks people were benchmarking that and I think they weren’t a long term. Here’s our our good friend of the show Tim Schneider Matador Economics markets can feel the tension as Israel contemplates the size of form of the response to Iran’s massive missile attack. Israel destroys Iran’s oil and gas infrastructure. Prices will rise. Just some brilliant analysis there. Here’s our good friend, John Kilduff, partner. To gain capital, $75 per barrel is sort of the fair value area or elevated tensions outstrip. I agree with that at all. We did you know there’s a bunch of other stuff. Again, it’s all wait and see mode what is happening with Iran and Israel and where will they? We have Gulf states lobbying Washington to stop Israel from attacking Iran’s oil sites, mainly due to the fact that if that does happen, it could start an all out war on other oil facilities. You could see this chain reaction. You know, I want to make sure I mention everybody who still is suffering from Helene and Milton Lee. You know, our thoughts and prayers are with you, for sure. You know, that has kind of factored in a little bit to where prices are. I think that’s partly why we saw natural gas. You know, gasoline shortages have really have, you know, actually just crippled the state of Florida, about 7900 gas stations out of commission and at least and at least 2.5 million without power. But hopefully we can continue to to to state there. Florida is just for reference, the third largest gasoline consumer in the United States where there are no refineries, making it pretty pretty dependent on waterborne imports are just pretty, which is pretty, pretty nuts. Again, as I mentioned in that open there, Libya, Right. It’s 1.25 million barrels back on line, which is pretty, pretty crazy. We will go ahead and start seeing earnings drop here in a week. So that comes up. [00:13:14][170.5]

Michael Tanner: [00:13:14] We also see rig counts drop. We only were up one week over week to 586. That’s compared to about 622 last year. We did see oil rigs up by two gas rigs down by one, which makes complete sense. We did see that current weekly oil production, according to the EIA, resumed its all time high, 13.4 million barrels per day. We also did see the frac spread count, which again is an estimate of the number of completion crews that are completing wells that are unfinished fell from October 4th from a to 38 back down to to 36. So our frac current spread slowing down a little bit. No rigs picked up in the Permian. They were still sitting at 304. We did see the Eagle Ford pick up that one rig from there. So a little bit of shifting here and there. But again, guys, it’s it’s spicy out there. [00:14:01][46.6]

Michael Tanner: [00:14:01] Okay. Stu will be back with us tomorrow to kind of cover whatever we did, see if there was a retaliation, if he was here, he would say, keep your gas tanks full. He starlink’s up and running. If anyone did get a chance to see specs X literally catching a rocket. Unbelievable. Elan probably one of the best engineers of all time. You have to put them in there, But stay safe out there, folks. We appreciate you checking this out here on the world’s greatest podcast for Stuart Turley, I’m Michael Tanner. We’ll see them on, folks. [00:14:01][0.0][828.7]

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