Double, Double, Oil and Trouble

Glenn Swanson
by Glenn Swanson
double double oil and trouble

CNN Money reports that potential oil-supply disruptions in Venezuela, along with reports of new violence in Nigeria, has oil-industry traders all a-tizzy. "The combination of these factors creates some concerns about the supply side of the equation," pronounced David Moore, a commodity strategist with Commonwealth Bank of Australia. Further frazzling traders' nerves: pipeline sabotage in the Niger Delta. Royal Dutch Shell says terrorist activity will prevent it from honoring all of its export contracts from the region for two months, deducting some 130k barrels a day off world supply. Still, after jumping to $93.59 a barrel on Monday morning, light sweet crude settled at $93.04 by late afternoon. Meanwhile, over at, blogger Steve Austin says the Iran Petroleum Exchange (or "Bourse") is set to begin using Euros to price oil on February 19th. (Currently, major oil markets trade in U.S. dollars.) The switch to Euros "could have devastating effects on the US dollar," Austin says. "Although under-reported by the media, this historical shift and its consequences should be watched closely." Rest assured, TTAC will oblige.

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4 of 9 comments
  • Ra_pro Ra_pro on Feb 12, 2008

    Kevin I would bet your neck on your prediction, just to help the natural selection along its long and winding path.

  • Franz Franz on Feb 12, 2008
    there is mounting technical evidence that Aramco is struggling to deal with increasing volumes of water at its hugest fields. With water production going up, he says, oil production is going down. Doesn't Saudi Arabia need water? Maybe they can leverage agriculture as their replacement economy.
  • Donal Fagan Donal Fagan on Feb 12, 2008

    franz, SA is pumping more and more of that water into their oil wells to force the crude up and out. I suppose they pump the water they separate from the oil back into the wells. Late stage oil extraction can also be accomplished by pumping various gases into the wells. There is always a large percentage of what they call unrecoverable reserves (URR) in the fields. Every so often they come up with a new, but more expensive, technique to recover some of that URR but its hard to believe we'll ever actually mine every last bit of oil.

  • Donal Fagan Donal Fagan on Feb 13, 2008

    Actually, I remembered URR wrong, it means Ultimate Recoverable Resources. There is a large percentage of oil that isn't in the URR because it can't be recovered profitably with current technology. You can always mine something out, but if it doesn't cost enough to make the mining worth it, no one will bother.