All posts by Simon Watkins

Russia Is Defeating The U.S. In The Middle East Oil Game

Historically, Russia goes to great lengths to hide or disguise its strategic intentions but it clearly feels empowered enough in the Middle East to very obviously stake its claim in the region – excluding, for the time being only, Saudi Arabia – by stating that a slew of Russian companies are to spend up to US$20 billion on oil projects in Iraq in the near term. “Since [U.S. President Donald] Trump outlined the new U.S. foreign policy of not engaging in conflicts abroad unless they were directly aligned with U.S. interests [October…

Iran Boosts Oil Recovery Rate To Counter U.S. Sanctions

Given the gaps available to Iran in the current U.S. sanctions environment to continue to export its oil – principally via rebranding as Iraq oil and various shipping scams – Tehran is making a move to dramatically improve the recovery rate on its key oil sites. Last week, the Islamic Republic’s Petroleum Minister, Bijan Zanganeh, announced the awarding of a US$1.3 billion contract to improve oil recovery at two onshore oil fields in Khuzestan province to Iran’s main infrastructure and power construction company, MAPNA Group.…

The Real Reason The Saudis Are Desperate To Restart This Giant Oilfield

Sources from Kuwait and Saudi Arabia last week let it be known that trial production of 10,000 barrels per day (bpd) would start at the Khafji field in the ‘Partitioned Neutral Zone’ (PNZ) that it shares with Kuwait on or around the 25th of February, with the field likely to be pumping about 60,000 bpd by August. Trial production of 10,000 bpd will also begin in the Kuwaiti area of the Zone in late March, likely increasing to around 80,000 bpd by the end of September, according to the sources. The plan is that within 12 months Khafji…

Oil Traders Could Lose Big On Coronavirus Panic

In a market environment in which the majority of day-to-day traders are retired, moved on, or fired within a decade or less, the reaction to events of a type that have not been seen in that timescale tend to be overdone. This suits the more seasoned traders who decided not to retire but to trade on their own account or for hedge funds because they can let these less-experienced traders skew the price before stepping in and scooping up big profits from corrections based on reality. Indeed, a realistic examination of the actual figures involved in…

This Delayed Megaproject Raises Questions About Arctic Energy

In the context of global liquefied natural gas (LNG) companies, Russia’s number two gas producer (after state-owned Gazprom), Novatek, has always been seen as being unusually reliable in terms of delivering its projects on time and on budget. This applied equally to the first three liquefaction and purification facilities (trains) of its US$27 billion flagship Arctic LNG project in the Yamal Peninsula (Yamal LNG) despite the full weight of U.S. sanctions being imposed on Russia in 2014 as a result of its annexation of Crimea. The announcement…

Iraq Is On The Brink Of An Energy Crisis

As the deadline for the U.S. to renew its waiver on Iraq importing gas and electricity from Iran approaches later this month, the three key players in this ongoing geopolitical saga have been preparing for all possible outcomes. As always in the global hydrocarbons markets, particularly in the Middle East, nothing is what it seems on first sight, with each of the main countries involved looking at outcomes that go way beyond mere gas sales. The positioning began in earnest last week with a virtue-signalling comment from the Trade Bank of Iraq’s…

The Two Global Powers Controlling Iran’s Oil Sector

Aside from becoming the number one petrochemicals powerhouse in the Middle East within the next three years, Iran’s priorities in the current U.S. sanctions environment is to increase its production of gas, particularly from the South Pars field, and of oil, particularly from the West Karoun fields. In both cases, this is partly because of the sheer opportunity available in the resources but partly as well because Iran can use the fact that many of these reservoirs are shared with Iraq to operate largely unfettered by such sanctions. The…

US Oil Exports Could Explode After Once In A Lifetime Power Shift In China

The consensus of opinion is that China’s commitment to buy an additional US$52.4 billion in U.S. energy products in 2020/21 as part of the Phase 1 trade deal between the two countries is impossible to achieve. The consensus is wrong, as a paradigmatic shift currently taking place in the core power structure of China means that the new energy products import targets are eminently achievable. Whether China wants to achieve them, though, is another issue entirely. Specifically, China has agreed to buy an extra US$18.5 billion of energy products…

Iran Faces Threat Of Full Global Sanctions

There is a lot more to last week’s decision by the U.K., France, and Germany to trigger the dispute resolution mechanism in the 2015 Joint Comprehensive Plan of Action (JCPOA) ‘nuclear deal’ with Iran than meets the eye. The countries – three out of the total six states that formed the P5+1 group that signed the JCPOA (the others being the U.S., Russia, and China) – are working in line with pressure from the U.S. “either to force Iran back to the negotiating table on the JCPOA or to exponentially increase its…

How The Assassination Of Soleimani Could Crush Iraq’s Oil Ambitions

Over and above its OPEC+ deal quota – with which it has only ever been marginally acquainted, at best – Iraq’s ambition to dramatically increase its oil production is now at a crucial point. Until only very recently, Iraq was rolling along, merrily breaking its previous and current OPEC+ production quota in producing oil in the 4.5-4.7 million barrels per day (bpd) range as and when it could. Its oil production targets of 6.2 million bpd by the end of 2020 and 9 million bpd by the end of 2023 looked relatively realistic in size,…