• 4 minutes Tariffs to derail $83.7 Billion Chinese Investment in West Virginia
  • 9 minutes Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 17 minutes Kaplan Says Rising Oil Prices Won't Hurt US Economy
  • 6 hours Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 3 hours Saudi Arabia plans to physically cut off Qatar by moat, nuclear waste and military base
  • 31 mins Saudi Arabia turns to solar
  • 21 hours Corruption On The Top: Netanyahu's Wife Charged With Misuse of Public Funds for Meals
  • 7 hours Why is permian oil "locked in" when refineries abound?
  • 14 hours Russia's Energy Minister says Oil Prices Balanced at $75, so Wants to Increase OPEC + Russia Oil by 1.5 mbpd
  • 3 hours Could Venezuela become a net oil importer?
  • 1 day OPEC Meeting Could End Without Decision - Irony Note Added from OPEC Children's Book
  • 10 hours Teapots Cut U.S. Oil Shipments
  • 1 day Gazprom Exports to EU Hit Record
  • 9 hours Oil prices going down
  • 1 day Could oil demand collapse rapidly? Yup, sure could.
  • 1 day China’s Plastic Waste Ban Will Leave 111 Million Tons of Trash With Nowhere To Go
  • 23 hours U.S. Withdraws From U.N. Human Rights Council
  • 11 hours Hot line, Macron: Phone Calls With Trump Are Like Sausages Best Not To Know What Is Inside
  • 11 hours Putin Says 'Fierce' U.S. Politics Hindering Summit With Trump
Alt Text

Tesla’s Newest Car Will Have Rocket Thrusters

Tesla CEO Elon Musk tweeted…

Alt Text

Will Iran Pursue Relations With North Korea?

Some foreign policy analysts criticized…

Alt Text

China Plans To Create A $78 Billion Natural Gas Giant

Chinese regulators are looking to…

James Stafford

James Stafford

James Stafford is the Editor of Oilprice.com

More Info

Trending Discussions

This Week in Energy: Pump Full of Geopolitics and Speculation

This Week in Energy: Pump Full of Geopolitics and Speculation

Chaotic preparations for presidential elections in Ukraine this weekend, a coup-in-the-making in oil giant Libya and the wider implications of a long-awaited Russia-China gas deal top the global energy agenda this week, but for the average American, it’s prices at the pump in advance of holiday driving that has top priority, and the role of speculators takes center stage.

Speculators generally don’t understand geopolitics, which requires detecting patterns of incidents that ripple through countries and regions and predicting how the dominoes will fall next. And while world events play a hefty role in dictating the price of oil, and in turn what Americans pay at the pump, it is how speculators perceive these events that truly dictates prices.

The Commodity Future Trading Commission reportedly shows speculators loading up on bets that crude will continue to climb.

“Typically traders, speculators and money managers are trying to gauge [the] current supply situation and medium-term outlook,” Justin Jenkins, a research analyst at Raymond James, told CNBC. “When you combine tensions outside the US with relatively limited [domestic] supply, it makes the market ripe for more than usual speculation.”

Amid a natural gas boom in North America, consumers are obviously wondering why prices at the pump haven’t seemed to reflect this. But this is the century of artificial markets, and things are no longer dictated by existing supply and demand—rather by “futures”.  And predicting the future of futures is a tricky business that baffles the most astute economist. The best anyone can tell the US consumer is that it will be another summer of speculation.

In the meantime, we can expect no reprieve from oil price-shaping incidents like the crises in Ukraine and Libya.

Pro-Russian separatists are taking over polling stations in Ukraine’s east ahead of 25 May presidential elections. Last night, at least 13 Ukrainian soldiers were killed by separatists at a military checkpoint in the eastern city of Donetsk.

Amid this crisis, China has signed a 30-year, $400-billion gas deal with Russia’s Gazprom in an Asian gas coup that Moscow has been waiting on for years. Some analysts are concerned that this deal, which includes a massive new pipeline from Russia to China, will increase competition for natural gas beginning in 2018 and in turn lead to an increase in natural gas prices for the European Union.

The flip side of this equation is that it could finally provide Europe with the will and daring to seek alternative supplies in earnest—including liquefied natural gas (LNG). Even the crisis in Ukraine has not been enough to pressure Western Europe to take on the Russian gas bull.

Then we have Libya, where what can either be described as a rebel-takeover or a coup is fully underway.  Las week, rebels led by former General Khalifa Haftar stormed the parliament and dissolved the General National Congress, vowing to take down lawmakers and extremist groups.

The violence has led Repsol and Total, among others, to withdraw some staff from Libya and to reduce their presence in the capital, Tripoli.

Overall, Brent crude prices held at just over $110 per barrel on Friday, for a second week, largely thanks to the chaos in Libya and Ukraine.

James Stafford
Editor, Oilprice.com




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News