Oil monopolization in US to offset Iranian risks to crude market
It is reported that ahead of Brent crude contracts expiration in December, and given the lingering perspective of Iran re-entering the European oil supply, the risks of an increased turbulence in the international oil markets are rife.
However, whilst persistently low oil prices are pressuring US shale small-caps, the global crude giants like Exxon, Chevron, BP, Shell and Total are poised to buyout a significant share in the North American market, allowing them to improve their commercial performance.
The entire situation in the global oil trade is determined by these oppositely directed trends concerning crude prices, while the Obama administration’s decision to axe the Keystone XL pipeline project yields some ill stability to the market.
On Thursday, oil prices settled at just above $46/bbl after several days of gradual decline. The coming winter season provides a higher demand for petrol and other fuels and oil-based lubricants.
Modest technical buying has also been a supporting factor to the prices; however, the anticipated monopolization in the US oil market would be a major upward driver, while the advent of Iranian oil in Europe will hurt crude’s valuation.
Whether the two tendencies will equal each other is yet to determined, but the fact of the matter is the international oversupply of oil is still here amidst a sluggish growth in most economies.
In the US, the Obama administration last week axed the Keystone XL pipeline project, which would deliver oil from the Canadian Alberta to refineries in Texas at transportation expenses thrice cheaper than those now.
The move thus prevented further depreciation of oil. Meanwhile, as shale small-caps are still under pressure of low prices, the world’s six biggest energy enterprises have accumulated roughly $500 bln, intending to buyout large portions of the yet decentralized US crude supply.
Exxon Mobil Corp. was reported to have gathered some $320 bln ready for acquisitions in the short-term. Chevron accumulated some $65 bln in money liquidity and its on stock it is ready to trade in for shale small-caps.
The British giant BP Plc. has $53 bln, closely followed by Shell, ConocoPhillips, and the French Total, each having about $30 bln.
Meanwhile, these half-trillion dollars the six petroleum giants are intending to invest in merger deals, expanding their presence in the North American oil production, effectively pushing small-caps off the market and ending the shale revolution, a major factor to blame for the recent collapse of the oil prices.
Source : Sputnik