• 25 mins London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 2 hours Rosneft Signs $400M Deal With Kurdistan
  • 4 hours Kinder Morgan Warns About Trans Mountain Delays
  • 10 hours India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 15 hours Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 19 hours Russia, Saudis Team Up To Boost Fracking Tech
  • 1 day Conflicting News Spurs Doubt On Aramco IPO
  • 1 day Exxon Starts Production At New Refinery In Texas
  • 1 day Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 2 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 2 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 2 days China To Take 5% Of Rosneft’s Output In New Deal
  • 2 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 2 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 2 days VW Fails To Secure Critical Commodity For EVs
  • 2 days Enbridge Pipeline Expansion Finally Approved
  • 2 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 2 days OPEC Oil Deal Compliance Falls To 86%
  • 3 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 3 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 3 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 3 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 3 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 3 days Aramco Says No Plans To Shelve IPO
  • 6 days Trump Passes Iran Nuclear Deal Back to Congress
  • 6 days Texas Shutters More Coal-Fired Plants
  • 6 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 6 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 6 days Chevron Quits Australian Deepwater Oil Exploration
  • 6 days Europe Braces For End Of Iran Nuclear Deal
  • 7 days Renewable Energy Startup Powering Native American Protest Camp
  • 7 days Husky Energy Set To Restart Pipeline
  • 7 days Russia, Morocco Sign String Of Energy And Military Deals
  • 7 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 7 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 7 days India Needs Help To Boost Oil Production
  • 7 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 7 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 7 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 7 days District Judge Rules Dakota Access Can Continue Operating
Alt Text

China Takes Aim At The Petrodollar

In a potentially disrupting move…

Alt Text

Is OPEC Considering Deeper Output Cuts?

You could argue OPEC and…

Alt Text

India’s Urban Explosion Boosts Oil Demand

As India sees incredible growth…

Colin Chilcoat

Colin Chilcoat

Colin Chilcoat is a specialist in Eurasian energy affairs and political institutions currently living and working in Chicago. A complete collection of his work can…

More Info

US Sees Huge Energy Opportunity In Europe

US Sees Huge Energy Opportunity In Europe

If 2015 is anything like 2014 we can expect a wild ride. Oil price volatility – including its downward trend – will linger well into the first and second quarters as global production persists and key conflicts in Eastern Europe and the Middle East show no end. For its part, the United States is better positioned than most – the US is poised to carry the global economy in 2015 with projected GDP growth of 3.1 percent. However, converting this potential into meaningful energy trade and/or soft power is another matter altogether and 2015 offers limited opportunities.

US production has shown no signs of a significant slowdown and the Energy Information Administration predicts growth in 2015 – approximately 700,000 barrels per day. Despite the collapse, prices remain high enough to support the most vital development drilling activity in the Bakken, Eagle Ford, and Permian Basins. The rig count is declining, but data from the 2008-09 recession suggests a drop in production will not be so dramatic.

Drilling In North Dakota 08-09

Perhaps in anticipation of greater volumes, the Obama administration and the Department of Commerce clarified existing regulations and opened the door for increased US exports last week – up to one million barrels per day (mbpd) of ultra-light crude oil. The exports will expose producers to more lucrative markets abroad and may further narrow the price spread between Brent and WTI. But who’s buying?

Related: Top Five Possible Energy Surprises For 2015

Among the most interested parties is the European Union (EU). Let’s take a quick glance at their current energy situation. Liquids consumption is expected to decline 0.14 mbpd this year after falling in both 2013 and 2014. Not great news, but holes in the market are opening. Russian crude exports to the EU are down more than five percent from a year ago as President Vladimir Putin pushes more and more crude toward China. Moreover, OPEC crude to Europe is also down nearly 4 percent, placing more pressure on the EU’s declining domestic fields in the North Sea. While not a complete fix, US crude represents a functional stopgap measure. However, it’s not simply a matter of ask and you shall receive – there remain some barriers to settle.

First, the Transatlantic Trade and Investment Partnership (TTIP) – TTIP is a proposed free trade agreement between the EU and the US. Negotiations began in July of 2013, but a consensus is still not on hand. Of note are the provisions surrounding energy. The EU wants freer access to US energy and raw materials; demands that have been met with mixed emotions in the US. The agreement’s ability to facilitate oil, and perhaps more so LNG, is pending its approval, but most importantly TTIP – as the EU envisions it – represents a chance for a more liquid and flexible global commodities market.

Related: The Hidden Costs Of Cheap Oil

With or without TTIP, commodity prices will define energy trade between the two global superpowers. They’re still low, but it’s not all bad news. Current futures trading suggest both Brent Crude and West Texas Intermediate (WTI) will rebound in excess of 10 percent toward year’s end. This situation of contango adds some urgency and presents exporters and traders with another incentive to lock up futures contracts now. For forward buyers, it’s a decent hedge against the wildly uncertain markets. The EU has demonstrated a willingness to take advantage of gas contract differentials, but a surging dollar – which is at an 11-year high – reduces demand for dollar-denominated oil and gas.

2015 may provide answers to these problems, or render them more complicated than ever before. In any case, low prices and looming recessions across the globe afford the US a golden opportunity to exert its weight and perhaps help some friends along the way. Russia and Iraq won’t wait long however, and continue to pump more oil than they have in decades. If the money doesn’t line up for US oil and gas, budding nuclear relationships deserve a further look.

By Colin Chilcoat of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • John Calkins on January 08 2015 said:
    Excellent article, I have to disagree on the US being able to carry the global economy in 2015 with projected GDP growth of 3.1 percent. The market is a look into the future six months out. The declining prices are a gauge into the economy, similar to the past with gold and the gold standard. Now currencies are on open printing presses run by the Fed's and Central Banks, so oil has become the worlds benchmark for an economic standard.

Leave a comment




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