Russia, Ukraine, and Iran Dominate Energy Headlines
February 18, 2022
Russia, Ukraine, and the Iran nuclear deal continue to dominate energy news coverage. The market is currently moving lower as some of the bullish traders take their profits.
There was news of a military shelling between pro-Russian rebels and Ukraine forces on the eastern border across a cease-fire. However, the two have been at war for years where a ceasefire is periodically violated. Reports have said that Russia now has nearly 170,000 troops on all Ukraine borders but has pulled back some military equipment only to be replaced by other military equipment.
The amount of oil that Iran could bring to the market if sanctions are lifted is debatable but it seems like 500,000 to one million BPD in the first three to six months is a fair range of estimates. The other factor would be if Iran has a large amount in storage that could quickly enter the market. Any lifting of sanctions would be conditional on Iran agreeing to a new nuclear agreement. Even if a new deal is signed and sanctions are lifted, it will take time for the oil to become available. Iran has things it must do first to begin the process, including suspending uranium enrichment above 5%.
Saudi Arabia is signaling that it is not willing to produce more oil and will not push for changes to an agreement with Russia and other producers.
Pioneer CEO Scott Sheffield said crude could easily go to $150 per barrel in the coming months because of strong global consumption and OPEC potentially running out of spare capacity by year-end. Sheffield said Pioneer will not abandon its strategy of limiting production growth to 5% a year, even if oil prices do increase dramatically.