Three very different news stories dominated the week in energy – let’s look at those and then some oil ideas that might come from them.
The President made an 180-degree turn away from Chinese sanctions despite promising it to the delight of steel and aluminum workers during the campaign – and recently in tweets.
Now all of this is apparently on hold, and comes along with a promise of help for the already sanctioned ZTE Chinese phone company.
The return promises from China are a freer road into China for American goods – including oil and LNG.
But China has shown a great ability to promise much and deliver little, so we shouldn’t count this as a win yet – but the avoidance of a trade war should be seen as a very good thing for our energy stocks.
Second, we have the new stories of inside relationships of several Gulf states with the Trump campaign prior to winning the election. These discussions might help explain the easy decision of the Trump administration to abandon the Iran deal; part of those talks could have included a Saudi increase of lost Iranian supply in the wake of new sanctions. In addition, the June meetings might talk about relieving some of the production restraints inside OPEC members.
But I equally wouldn’t be so quick to believe these promises from the Saudis. They have suffered for the last 4 years with sub-$50 oil prices and with their big upcoming Saudi Aramco IPO…