We hate you but we want your oil! The most volatile commodity vs government hypocrisy
The following is a guest editorial courtesy of Andrew Saks, Head of Research and Analysis at ETX Capital.
Crude oil is these days viewed as a guilty pleasure.
Not by people using the refined products that are derived from it, those days are long gone. A quick perusal of the street signs that extend to a one mile radius of London’s Knightsbridge and Sloane Square stating that no vehicles are allowed to make even the slightest sound, added to the ultra-trendiness of the whirring of an electric motor observed by London’s cafe culture society means that the days of the high-octane traffic light grand prix are a thing of the past.
Knightsbridge and Sloane Square just a few years ago were the playground of the producers and users of fossil fuel. Today, they are bastions of silence as the electric luxury cars whirr past, driven by Elon Musk-influenced post-modern, planet conscious achievers.
The OPEC dominance over the world’s financial capital and its social status barometer is gone….. or is it?
As the British summer brings temperatures close to 30 degrees Celsius, no Kuwait, Dubai or Saudi registered Lamborghinis are roaring between SW1 and SW3. In their place are UK registered Porsche Taycans and Tesla Model X… and of course me in my Volvo XC90, using volts instead of combustible material to propel me through the capital whilst averaging over 700 miles per gallon.
Given this self-directed switch, and the national sanctions by the United States and many European countries on Russia, it is actually Russia that is having the upper hand over the smug, image-obsessed Western politicians and their absurd woke agenda.
The waffling about ‘climate change’ which dominated the elbow-bumping right-on trendiness of the media studies hipsters that have managed to get themselves into senior government positions in Europe and North America has been absolutely ignored by the OPEC nations, and in particular, by Russia, and rightly so.
The smart and learned among leaders will have realized that this was one big party funded by the locked-down taxpayer, and that the G7 leaders would head to the NATO summit with an equally right-on agenda, and they would be right.
Mainstream media is portraying the relationship between the west – particularly Britain and the US – and Russia to be at its lowest since the cold war, however that would be stretching things a very long way.
The relationship is very much alive, despite its one-way nature with Russia largely tolerating sanctions whilst working with the US to bring that substance that despite the climate wokeism, the West is still absolutely addicted to – crude oil.
Western leaders have the cheek to insinuate that Russia will top the agenda at NATO today as alliance leaders gather for their first summit after flying once again to an overseas jurisdiction without being forced into a hotel for 10 days and being badgered by the police every day whilst the taxpaying electorate have to do so, yet on the other hand, the US has been working hard to ensure that Russia’s oil pipeline monopoly Transneft opens up its taps big time.
Whilst Biden and Johnson warble about climate change and how much they disagree with Russia’s politics, deals behind the scenes have been done with Russian authorities who own the majority of oil production infrastructure in Russia which is one of the world’s largest oil producing nations to supply 36.7 million tonnes of oil in June this year.
Transneft plans to pump 2.92 million tonnes of oil through the Druzhba pipeline this month according to longstanding state-run Russian media agency TASS.
The result is higher supply; however, oil prices are still remarkably high despite the increase in supply, with WTI Crude standing today at over $70 per barrel on the US commodities market.
NATO secretary-general Jens Stoltenberg told Times Radio: “The relationship between NATO and Russia is at a low point, the lowest point since the end of the Cold War – and we see a pattern of Russian behaviour.
It would be interesting to think of this when Mr Stoltenberg made a ‘please like me’ campaign in 2013 by releasing a television show of him spending a day as a taxi driver, smiling and talking to members of the public in Oslo, Norway as he drove around the city in a car running on traditional gasoline.
His escapades in that show demonstrated his lack of driving skills, as he confessed that he had not driven a car in 8 years prior to that show.
Ken Livingstone, the former London mayor and staunch socialist had never driven a car in his life and was quick to make anti-car laws yet worked within a government which could not survive without tax revenue from gasoline usage.
This is effectively an oil price tug of war. Oil prices are rising massively, and traders know it. Goldman Sachs last month put out a prediction that oil would rise to $80 per barrel soon, and earlier today Bala Wunti, NNPC’s Group General Manager for National Petroleum Investment Management Services said at the Nigeria International Petroleum Summit “I was talking to one of my senior colleagues yesterday, and he said, well, it is time for someone to speak the truth. If nothing is done and this trend continues, guys, we should be ready for a $200 per barrel of oil. The reason is simple, if you stop investing in the oil and gas sector, you can only produce what you have today.”
That reflects viewpoints from within Russia last week when a Russian oil executive predicted the same potential $200 per barrel in the future.
The APAC region is using more oil than ever and is highly industrious and is not bogged down by absurd lockdowns or woke environmental follies.
Oil volatility over the past year has been absolutely epic, ranging from negative equity to rising prices despite increased supply.
Russian officials understand this demand and as a result remain calm as this commodity is the ‘do as I say, not as I do’ commodity which Western leaders are lining up for whilst at the same time biting the hand that feeds them.
The Lord Mayor of London may be chauffeured to and from appointments in a Tesla Model X, as this looks good in front of those who may otherwise challenge him on climate change, however Vladimir Putin’s chariot of choice is a 7.7 liter, 6 ton ZIL 4112R which does 5 miles per gallon.
Who is the real boss?
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