Time For A Change

The world Is watching and so is oil as the death toll rises in the streets of Iran, where the people revolt against a terrible economy and the lack of any real freedoms and rights. At least 19 people were reported killed in street protests in Iran, while President Hassan Rouhani, on one hand, defended their right to protest but on the other hand warned he would show “no tolerance” for those who incite unrest. Many arrests have been made and the government of Iran says it may seek the death penalty, for what they say are crimes against God, in demonstrations that have gone on for over 5 days in a row.

President Trump tweeted that ”Iran is failing at every level despite the terrible deal made with them by the Obama Administration. The great Iranian people have been repressed for many years. They are hungry for food & for freedom. Along with human rights, the wealth of Iran is being looted. TIME FOR CHANGE!”

The uprising in Iran is just another risk factor in a global oil market that is tightening. Strong global demand and shale oil production that is falling far short of what the Energy Information keeps telling us it is. Reports from the Texas Railroad Commission is telling us that Texas shale oil production has been stagnant and not rising as the production decline rate year over year is taking its toll. Total oil stocks are down whopping 135M barrels just since April even as U.S. oil production is supposedly at a record high. Bad data is becoming a bigger risk as underinvestment has led to the least amount of oil discoveries in 70 years and the global oil replenishment rate ratio fell to 11 percent this year, down from more than 50 percent in 2012 according to a new report. That is a dangerous situation, especially because of the overestimates of shale oil output.

ETF reports that this has led to the lowest ever volumes of oil discoveries in 2017, Rystad Energy said last week. While the low level of discoveries is not an immediate threat to global oil supply, it could become a threat ten years down the road, according to Rystad Energy.