Actionable Intelligence Alert

Bloomberg Green article says the transition to 100% zero carbon will cost $114 trillion dollars. That is 5-6 times the size of the US single-year GDP. I don't think that will happen.    Nevertheless, the political class will move this agenda forward. Heads we win, tails we win more.

Interesting comments out of JP Morgan CEO this week regarding our energy policies in the US.    In addition, it looks like the zeitgeist is moving away from ESG, at least by the bankers.

As most of you know the OPEC members decided on a 2 million barrel per day reduction to their production quota. This is not necessarily a cut in production because the organization members were already underproducing their quotas by 3.5 million barrels.   Nevertheless, this is a big boost for oil prices because it represents a sentiment shift in oil markets. Of course, oil markets responded by rallying. I discuss the second-order effects in this video.

With the Nordstream 1 and 2 pipeline destruction last week, the EU energy situation is now critical.   However, the various industries will try and adapt as best they can. One way to adapt will be to replace gas consumption with oil consumption. This could be close to a million barrels per day.

As Stan Druckenmiller has said," “Earnings don’t move the overall market; it’s the Federal Reserve Board… focus on the central banks, and focus on the movement of liquidity… most people in the market are looking for earnings and conventional measures. It’s liquidity that moves markets...”~ Stan Druckenmiller This is what we are seeing and it will continue until central banks pause and go back into a new liquidity cycle.

Due to sanctions placed on Russia by the EU, oil and refined products now need to be sourced from places more distant from the EU than before. This is causing more ton-miles for the existing tanker fleet.  This is also causing rates to skyrocket as there are not enough tankers to move all this product further distances. It appears, that for as long as sanctions are in place, we are looking at a time of elevated rates for tankers.

The energy minister was interviewed on CNBC. He was asked why is India still buying oil from Russia. The interviewer tried to make the purchase of oil from Russia a moral issue.    The minister wasn't going to have it. He is responsible to India not the EU, the US, or Ukraine.

It was announced yesterday that the Nordstream 1 pipeline will be down indefinitely.  The only Russian gas coming into the EU is coming in through the pipelines from Ukraine. That will not be enough. We are now seeing story after story of businesses shutting down and jobs lost.

For several years billionaire resource investor Rick Rule maintained the view that a real move higher in uranium prices would be incumbent on the restoration of nuclear energy in Japan.  It seems he was proved correct as Japan recommitted to nuclear energy in the past week which caused a blastoff in uranium stock prices.

Recent comments by the Sadi Aramco CEO and the CEO of OPEC back up what we have been saying for a while now. Although the west is moving rapidly to transition away from oil, the rest of the world, and the majority, will be using oil for decades.