May 28th, 2015
Ali Al-Naimi, Saudi Arabia’s Minister of Petroleum and Minerals, just shocked the energy industry.
No stranger to being at the center of a tempest, Al-Naimi has seen his fair share of controversy.
After all, his strong-arm move to get OPEC to hold the line on production last Thanksgiving laid down the gauntlet to American shale producers, ushering in a collapse in crude prices. And then the manipulation of export prices to Asia – the main object of which was the removal of Russian competition in the Asian market – and the decision to increase Saudi production both had one overarching objective:
Maintaining market share in the face of rising non-OPEC production.
But speaking last week at the Business and Climate Conference in Paris, Al-Naimi made what is probably his most shocking proclamation to date.
May 26th, 2015
If you still doubt that geopolitical heat can raise the price of oil, I strongly advise you to carefully watch the events that are about to play out.
At the top of my own list is Iraq. Geopolitical matters there continue to worsen. U.S. Secretary of Defense Ashton Carter has just called out the Iraqi military – during a high-profile TV interview no less – claiming that it lacks the will to fight. ISIS is solidifying positions within marching distance of Baghdad. And the main Iranian general is condemning the U.S. for “not doing a damn thing” to halt the ISIS advance.
These three developments will have an impact on global crude oil stability and are thereby certain to affect oil prices.
But a fourth situation is about to unfold… with the potential to have a more direct effect on oil.
Here’s my take on what’s going on in Iraq… and what it means for energy prices…