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The Biggest Threat To Oil Prices: 2-Mile Long Stretch Of Iraq Oil Tankers Headed For The U.S.

Tyler Durden's picture




 

After some initial excitement, November has seen crude oil prices collapse back towards cycle lows amid demand doubts (e.g. sllumping China oil imports, overflowing Chinese oil capacity, plunging China Industrial Production) and supply concerns (e.g. inventories soaring). However, an even bigger problem looms that few are talking about. As Iraq - the fastest-growing member of OPEC - has unleashed a two-mile long, 3 million metric ton barrage of 19 million barrel excess supply directly to US ports in November.

Crude prices are already falling:

 

But OPEC has another trick up its sleeve to crush US Shale oil producers. As Bloomberg reports,

Iraq, the fastest-growing producer within the 12-nation group, loaded as many as 10 tankers in the past several weeks to deliver crude to U.S. ports in November, ship-tracking and charters compiled by Bloomberg show.

 

Assuming they arrive as scheduled, the 19 million barrels being hauled would mark the biggest monthly influx from Iraq since June 2012, according to Energy Information Administration figures.

 

 

The cargoes show how competition for sales among members of the Organization of Petroleum Exporting Countries is spilling out into global markets, intensifying competition with U.S. producers whose own output has retreated since summer. For tanker owners, it means rates for their ships are headed for the best quarter in seven years, fueled partly by the surge in one of the industry’s longest trade routes.

Worst still, they are slashing prices...

Iraq, pumping the most since at least 1962 amid competition among OPEC nations to find buyers, is discounting prices to woo customers.

 

The Middle East country sells its crude at premiums or discounts to global benchmarks, competing for buyers with suppliers such as Saudi Arabia, the world’s biggest exporter. Iraq sold its Heavy grade at a discount of $5.85 a barrel to the appropriate benchmark for November, the biggest discount since it split the grade from Iraqi Light in May. Saudi Arabia sold at $1.25 below benchmark for November, cutting by a further 20 cents in December.

 

“It’s being priced much more aggressively,” said Dominic Haywood, an oil analyst at Energy Aspects Ltd. in London. “It’s being discounted so U.S. Gulf Coast refiners are more incentivized to take it.”

So when does The Obama Administration ban crude imports?

And now, we get more news from Iraq:

  • *IRAQ CUTS DECEMBER CRUDE OIL OSPS TO EUROPE: TRADERS

So taking on the Russians?

*  *  *

Finally, as we noted previously, it appears Iraq (and Russia) are more than happy to compete on price.. and have been successful - for now - at gaining significant market share...

Even as both Iran and Saudi Arabia are losing Asian market share to Russia and Iraq, Tehran is closely allied with Baghdad and Moscow while Riyadh is not. That certainly seems to suggest that in the long run, the Saudis are going to end up with the short end of the stick.

Once again, it's the intersection of geopolitcs and energy, and you're reminded that at the end of the day, that's what it usually comes down to.

 

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Wed, 11/11/2015 - 12:38 | 6777551 tovar2
tovar2's picture

are we sure there is oil in those tankers and not Syrians, Afghanis, Bangledeshis getting a free ride to come join the Free Shit Army?

Wed, 11/11/2015 - 13:30 | 6777779 TREE MAN
TREE MAN's picture

Syrians n afghanis are headed to eu to join their FSA

Wed, 11/11/2015 - 12:45 | 6777573 Two-bits
Two-bits's picture

Let's use this tech on those ships and see what lies within.

http://www.dailymail.co.uk/news/article-3312570/Two-men-arrested-police-...

 

 

Wed, 11/11/2015 - 12:48 | 6777584 Pumpkin
Pumpkin's picture

Oil tankers are about 1200-1500 ft long.  So what, 8-10 tankers?

Wed, 11/11/2015 - 13:00 | 6777646 cpgone
cpgone's picture

So if each tanker held a million barrels (which I doubt), it would be barely 40% of one day.

Wed, 11/11/2015 - 12:50 | 6777588 cpgone
cpgone's picture

What happend to twilight in the desert Matt Simmons. ,running out of oil and all.

The latest laugh is that the elties are doing this to "punish " the Russians.

Man Ive lost a bundle on pessimissim porn.

Wed, 11/11/2015 - 14:46 | 6778166 FIAT CON
FIAT CON's picture

"What happend to twilight in the desert Matt Simmons"

Matt Simmons is dead.


Wed, 11/11/2015 - 12:51 | 6777592 I Write Code
I Write Code's picture

Not oil, Syrian "refugees"

Wed, 11/11/2015 - 12:57 | 6777622 TideFighter
TideFighter's picture

In an unrelated article, Escalade sales are up.

Wed, 11/11/2015 - 12:58 | 6777634 FreeNewEnergy
FreeNewEnergy's picture

But, what about peak oil?

Or, it's West Virginian cousin/husband/mother, peak cheap oil?

All that extra oil got me thinking back to the 50s, because, ya know, a little dab'll do ya!

https://youtu.be/aQBtw6nqFxY

Amazingly, Unilever still makes and sells Brylcreem.

Wed, 11/11/2015 - 14:18 | 6778028 I Write Code
I Write Code's picture

Crude oil, a little dab'll do ya
Use more only if you dare
But watch out, the Arabs will pursue ya:
They'll love to get their fingers in your hair
Before they cut off your head.

Wed, 11/11/2015 - 12:59 | 6777637 rsnoble
rsnoble's picture

So in other words, oil should've never gotten so fucking high to begin with.  Instead of relishing the cheap gas, need to get off our asses and make 100mpg+ cars, or cars that use none at all that don't cost $100k and blow up, and fuck the oil morons forever.

Wed, 11/11/2015 - 12:59 | 6777642 ToSoft4Truth
ToSoft4Truth's picture

 Bush was right, Kill Saddam and cheap oil would be plentiful.   

Wed, 11/11/2015 - 13:02 | 6777660 NoWayJose
NoWayJose's picture

Queue the typhoons and hurricanes!

Wed, 11/11/2015 - 13:03 | 6777663 ChargingHandle
ChargingHandle's picture

The economic red flags are so abundant that virtually all 12 charts I analyze in detail scream oh shit.

Wed, 11/11/2015 - 13:06 | 6777677 FreeNewEnergy
FreeNewEnergy's picture

ChargingHandle, please elaborate. I'd be interested in seeing your Dirty Dozen.

Wed, 11/11/2015 - 13:03 | 6777665 _ConanTheLibert...
_ConanTheLibertarian_'s picture

What if the first ship explodes? Do they all go next like Chinese fireworks?

Wed, 11/11/2015 - 13:06 | 6777672 TideFighter
TideFighter's picture

nice +1000

Wed, 11/11/2015 - 13:04 | 6777668 blown income
blown income's picture

Gas in Lafayette la was 1.79 yesterday morning

Way home tanker truck

Sign went to 1.99

Wed, 11/11/2015 - 13:09 | 6777689 Baby Eating Dingo22
Baby Eating Dingo22's picture

Easy solution

Call it a threat and put those shiny new F-35s to good use

Wed, 11/11/2015 - 13:42 | 6777840 Yogieu
Yogieu's picture

kamikaze mission?

Wed, 11/11/2015 - 13:48 | 6777865 New_Meat
New_Meat's picture

"I'm Paul Krugman and I approve this high-tech solution"

Wed, 11/11/2015 - 16:09 | 6778557 Nobody For President
Nobody For President's picture

Against unarmed tankers with no air support, they just might be able to pull it off.

Or send one A-10 Warthog...

Wed, 11/11/2015 - 13:15 | 6777690 undercover brother
undercover brother's picture

Such is supply side economics, and the world has been living with it for thousands of years, so deal with it.  Eventually the cycle will come full circle and excess supply will taper off and price will stabilize.  the strong will survive and the weak will perish.  the bad investments will be lost and the good investments will thrive and grow to lead economies back to strength.   Only when intervened with by larger powers such as short sighted governments who are under contract from massive financial influences, do these laws of economics become artificially warped and out of balance.

On another note, I've read a lot of comments here and many of you for some reason think these tankers of oil coming to the US is a bad thing.  Why is that?  We're all consumers here, or I believe we are.  Each and every one of us benefits up and down the line from cheap oil, from the gas we put in our cars to the food on our table.  The only people who may not benefit from declining oil prices are 1) oil companies who are forced to hedge and 2) BANKS, who have loaned money on an asset of particular value and are now under water on those loans.  

Wed, 11/11/2015 - 23:04 | 6780320 El Hosel
El Hosel's picture

..... Whatever, gasoline was $1 a gallon and all the debt was measured in billions a few years ago. The "bad thing" has almost nothing to do with oil or supply side.

Its CORRUPTION and its out of control.

Wed, 11/11/2015 - 13:18 | 6777721 Baby Eating Dingo22
Baby Eating Dingo22's picture

Isn't drone delivery more cost effective?

Wed, 11/11/2015 - 13:18 | 6777722 SmittyinLA
SmittyinLA's picture

STIHIB

Submission To Islam Has Its Benefits 

Wed, 11/11/2015 - 13:21 | 6777736 Free_Spirit
Free_Spirit's picture

The US needs to takeout its former ally Saudi Arabia, that'll correct oil prices, and correct much in the middle east

Wed, 11/11/2015 - 13:23 | 6777749 Consuelo
Consuelo's picture

 

 

With approval from the ZH board, may I now have permission to purchase that red Challenger Hellcat I've had my eyes on...?

Wed, 11/11/2015 - 13:24 | 6777752 bid the soldier...
bid the soldiers shoot's picture

Are there any more questions about why we invaded in Iraq in 2003?

Wed, 11/11/2015 - 13:30 | 6777780 jughead
jughead's picture

I'm not laughing with you, I am laughing at you. Yeah, we invaded Iraq so we could destory our own domestic oil industry...gotcha...moron. 

Thu, 11/12/2015 - 00:07 | 6780515 bid the soldier...
bid the soldiers shoot's picture

Yo needlenose,

Jughead is known for his ability to consume unusually large quantities of food in a single sitting without getting sick or gaining weight although he sometimes sports a potbelly after particularly large meals, prolly many beers.


Jughead's love of food has given him heightened senses. He can identify food in a can by smell without opening it,

Can you smell what's inside my can?

Well, Jug, I'm glad you're laughing at me.  If you were laughing with me, I'd be in big trouble.

 

https://en.wikipedia.org/wiki/Jughead_Jones

What am I doing?  Telling Jughead to read about himself in wikipedia.

Wed, 11/11/2015 - 13:26 | 6777764 delivered
delivered's picture

How ironic. What was it about 40 years ago when the oil embargo hit and the only lines you saw were cars stretching around the block waiting to fill up at the gas station. Now, its tankers lined up waiting to find a buyer for its oil. Not a wait to be had at the local gas station but just the opposite for the oil flowing into the country. My how times have changed.

Thu, 11/12/2015 - 05:05 | 6781036 MalteseFalcon
MalteseFalcon's picture

I remember 40 years ago waiting in long lines to buy gasoline that thankfully had tripled in price in less than a few months.  CNN explained that we had nearly run out, so what could they do?  I was happy to do my part.

Then I drove to Canuckistan (cheap maple syrup) and there gas was still cheap and there were no lines at all?!?  And I thought "Hey, what's going on here?" Well, after all those months, the Canuckistanis hadn't gotten the memo on Peak OilTM

I called up the police and they straightened Canuckistan right out, and saved what remained of Canuckistan's oil.

Wed, 11/11/2015 - 13:28 | 6777772 voltrader66
voltrader66's picture

It's laughable how ZH had to get in their 2 Roubles worth of positive spin for Father Russia. What do you mean "Iraq (and Russia) are more than happy to compete on price"? Russia absoultely cannot compete on price, it is killing them, that is why the whole country has gone down the toilet. Your beloved leader Putin has just made sure that by entering the middle east quagmire, Russia is going backwards another 20 years.

Thu, 11/12/2015 - 05:08 | 6781041 MalteseFalcon
MalteseFalcon's picture

You're so right.  Entering the middle east quagmire sets a country back 20 years.

LOL @ Putin!

Wed, 11/11/2015 - 13:32 | 6777790 WTFUD
WTFUD's picture

This is all BS! I've been trying to purchase 2-4 million barrels of Crude Oil for the last 3 months with zero success and i'm not entirely stupid.

Thu, 11/12/2015 - 05:09 | 6781045 MalteseFalcon
MalteseFalcon's picture

Check eBay or Amazon.  The internets are full of oil.

Wed, 11/11/2015 - 13:33 | 6777794 Falling Down
Falling Down's picture

False flag in 3...2...1...

Wed, 11/11/2015 - 13:39 | 6777817 arrowrod
arrowrod's picture

Two miles long?

Big deal, a tanker is 1000 foot long.  10 tankers, 2 miles. 
Wed, 11/11/2015 - 13:49 | 6777872 New_Meat
New_Meat's picture

they don't do tailgating very well

Wed, 11/11/2015 - 15:02 | 6778222 Blano
Blano's picture

Beat me to it.

Not seeing a problem here.

Wed, 11/11/2015 - 13:48 | 6777871 Hohum
Hohum's picture

19 million barrel excess supply? That gives the ole USA one more day of consumption.  Hurrah!

Wed, 11/11/2015 - 13:51 | 6777881 _SILENCER
_SILENCER's picture

$1.79 in Texas for gas.

Here in the PRK, 91 octane fuel is goddamned $3.13 a gallon.

Wed, 11/11/2015 - 14:01 | 6777926 MedTechEntrepreneur
MedTechEntrepreneur's picture

Moar $$Cash$$ for "ISIS".... The "enemy" ...  

Wed, 11/11/2015 - 14:02 | 6777939 BlackHorsewithScales
BlackHorsewithScales's picture

I'm picturing the operation of ISIS delousing-"Stube" and barber shop upon arrival of the malcontents.

Wed, 11/11/2015 - 14:08 | 6777973 Son of Captain Nemo
Son of Captain Nemo's picture

Wihat I wouldn't give for a phone call right about now from Moscow to the White Chimp in D.C.... "We know that you don't care about human life"... yours, ours, or anybody elses... so I thought I'd give you the ultimate gift that strikes fear in you the most next to the worthless "green shit paper" you keep printing and holding everyone else hostage with!

Blowing up a convoy of tankers filled with oil that you stole!

Paybacks a bitch!!!...

Wed, 11/11/2015 - 14:12 | 6777999 henry chucho
henry chucho's picture

Apache Corp; Share price-$49.17..Earnings per share-Minus $54.96..LOL

Wed, 11/11/2015 - 14:50 | 6778175 Able Ape
Able Ape's picture

Totaling up all the SUCCESS stories of the Neocons and the result is: they better change their name to NEOClowns...

Wed, 11/11/2015 - 14:59 | 6778208 Blano
Blano's picture

Isn't 2 miles of ships like, 10 of them or something?  Not seeing the big deal here.

Wed, 11/11/2015 - 22:54 | 6780283 Barrack Chavez
Barrack Chavez's picture

If you look at the graph in the article, it shows that the Iraqi's can't seem to load tankers regularly. The stuff comes in bursts.

10 tankers every day might be something to worry about, but 10 tankers every six months doesn't warrant a blog post.

19 million barrels sounds like a lot of oil to the clueless clowns who write "news", buts its one day's supply. One day supply sent every six months? And they have to hype this as a big deal?

The headline should read: "No one watching news media again; we are desperate for attention. We need to make up a false crisis to freak people out over nonsense. Film and panic at 11"

Wed, 11/11/2015 - 15:00 | 6778213 Nanur
Nanur's picture

Not to worry.  Paul Ryan will repeal Obama's "cash for clunkers" and make everyone put clunkers back on the road.  Problem solved!

Wed, 11/11/2015 - 15:13 | 6778268 1stepcloser
1stepcloser's picture

while Russia is in the area and in the air...I believe they see ISIS rebels near iraqi oil wells.... Some well places love bombs, Russia's Oil price problem is resolved...

 

https://www.youtube.com/watch?v=eAbm01LmpzY

Wed, 11/11/2015 - 18:30 | 6779181 alphahammer
alphahammer's picture

Sure why not. They can't ISIS as it is and the footage of their air campaign would be used as proof that they could hit just about anything -- just not the thing they were aiming for...

Wed, 11/11/2015 - 15:59 | 6778494 Goldbugger
Goldbugger's picture

Next $30 a Barrell oil and the SPX will continue to fraudulently rise. Thank you PPT, Central banks and the FED with all your printing.

Oh and let's not forget CNBC with all your lies.

Wed, 11/11/2015 - 16:46 | 6778744 giggler321
giggler321's picture

With so many tankers - they'll never close the strait of hormuz...

Wed, 11/11/2015 - 16:54 | 6778775 The Duke of New...
The Duke of New York A No.1's picture

Bullish for the Alberta Real Estate market, cough, cough.

Wed, 11/11/2015 - 17:43 | 6779009 BustainMovealota
BustainMovealota's picture

Price of oil has nothing to do with supply and demand of oil itself.

Wed, 11/11/2015 - 17:56 | 6779065 fowlerja
fowlerja's picture

Time for the US to build another Strategic Oil Reserve...buy low and save for a rainy day...

Wed, 11/11/2015 - 22:47 | 6780251 Barrack Chavez
Barrack Chavez's picture

Obama has done the opposite. Obama (and Bush) filled the reserves when WTI was around $100, and (you just can't make this level of stupidity up) -- Obama is now selling oil from the SPR to reduce his spending deficit.

Obama bought oil at $100, and he's selling it around $45. That's Obamanomics in a nutshell.

If you think the Saudi's (or anyone in OPEC) is going to be afraid of Obama ruining their business, think again.

Wed, 11/11/2015 - 18:35 | 6779200 Deez Nuts
Deez Nuts's picture

I wonder what reason the oil fraudsters will make up or how many refineries they'll close down for bullshit reasons to keep the price of fuels UP.

America..
A nation built of nested frauds and ponzi schemes.

Wed, 11/11/2015 - 19:59 | 6779504 El Hosel
El Hosel's picture

Well Lubricated, Bitchez.

Wed, 11/11/2015 - 20:38 | 6779636 nah
nah's picture

They hate our freedom

Wed, 11/11/2015 - 20:59 | 6779709 natty light
natty light's picture

Since there is "excess liquidity " in the oil inventories and we need to stimulate the economy, why not have temporary negative fuel prices, a NFP policy if you will. I'm not  sure there wouldn't be a misalloation of resources, but it would reduce inventory and stimulate driving more.

 

/s

Wed, 11/11/2015 - 21:40 | 6779920 OutaTime43
OutaTime43's picture

OPEC isn't reducing extraction rates because the won't, it's because they CAN'T.  

Thu, 11/12/2015 - 00:47 | 6780691 onmail1
onmail1's picture

Iraq's gold looted

Iraq's antiques looted

Iraq's oil looted & more on the way

----

Substitute Iraq with the name of yor country (if u dont have the WMD)

Thu, 11/12/2015 - 03:24 | 6780947 kaboomnomic
kaboomnomic's picture

So... that's where ISIS exports its oils?? Uhuh....

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