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Anas Alhajji

@anasalhajji

6 Jun

Thread on #OPEC and OPEC+ meetings today:
(Media: please feel free to quote)

1- What is the importance of this meeting? 1-

First, Deepening the production cuts from what was previously agreed upon for the month of July, which would accelerate the rebalancing of the markets

2- Second, the unprecedented focus on the commitment of all members & the establishment of a monthly monitoring system for the production of member states & the #oil market. This means that the possibility of a monthly renewal of the agreement exists if there is a need for it.

3- Third, establishing a new system used for the first time by OPEC: reduction of future production quota if countries violate their current quota. This system has been historically adopted by world commodity organizations such as the Tin, Bauxite a& Coffee organizations.

Read 11 tweets

Anas Alhajji

@anasalhajji

9 May

هذه سلسلة تغريدات عن تكاليف إنتاج الصخري ومستقبله.

1- أغلب ما ينشر ويذكر في الإعلام العربي ووسائل الاتصال الاجتماعي عن #النفط الصخري عبارة عن عموميات، وكثيرا من الأحيان أفكار ومعلومات خاطئة. وأقولها من البداية: هناك شركات تستطيع تحقيق عوائد بين 15% و 30% بسعر 40 دولار للبرميل.

2- والقول بأن شركات #النفط الصخري لم تحقق أرباحاً يدل على جهل كبير بالصناعة. كما أن هناك منافع ضخمة اضافية منها توظيف عدد ضخم من الناس مباشرة أو غير مباشرة، وتمويل موازنات الولايات النفطية والحكومات المحلية، عدا الأعمال الخيرية والخدمات المجتمعية التي تقدمها هذه الشركات.

3- كما أن هناك جهل كامل في كيفية عمل الصناديق الخاصة والاستثمارات التي مولت مشاريع النفط الصخري، وكيف حققت هذه الصناديق أرباحا هائلة. البنوك والشركات الكبيرة دخلت على الخط فيما بعد. وتبعها دخول استثمارات لا يعرف أصحابها أي شيئ عن صناعة النفط عموما والنفط الصخري خصوصا، فخسروا.

Read 23 tweets

Anas Alhajji

@anasalhajji

2 Apr

Thread
What we know so far:

1- #Trump made the calls. His numbers of 10-15 mb/d of #oil production cut are farfetched, & I am trying to be polite here.

2- Saudi Arabia called for an emergency meeting of OPEC andOPEC+

3- It seems Saudis are responding to the market... but..

- Any cut lower than 7 mb/d will have no impact on the market. The decline in demand is forcing this cut. This is #oil that will not be sold anyway
- The 30% increase in oil prices this morning does not mean much for many US shale and Candian producers because of differentials

- If Saudis cut production to below 10 mb/d, but prices remain low, the blame will be squarely on #COVID19, something senators from oil-producing states missed. What will they say when Saudi Arabia cuts and oil prices remain low?

Read 8 tweets

Anas Alhajji

@anasalhajji

15 Mar

Thread: Economics of empty shelves
1- Stores stock shelves to maximum to give consumers sense of safety & buy only what they need, so they come back often. Studies show that, in general, consumers buy more than the items they wanted every time they come to the store..!

2- Gas stations want to give the same sense of security by having a number of pumps that are available most of the time, and many, all the time. The last thing a gas station owner or manager want to is to run out of gasoline.

3- Empty shelves sends the wrong massage: Things are running out, for every thing or certain items. Even those who have no idea what is going one will start developing a sense of urgency and buy. Even cool-headed people might end up and end up participating in the panic buying.

Read 15 tweets

Anas Alhajji

@anasalhajji

14 Mar

Thread
Random thoughts on #oil market

1- Oil is a vital strategic commodity that is interlinked with politics on both sides: supply & demand

2- Oil demand is a function of economic activities & technology

3- Economic activities are a function of economic systems and politics

4- The oil industry is capital intensive and highly technical, yet dangerous.

5- Most of the cost in the oil industry is up-front cost (% of fixed cost or sunk cost is high)

6- Oil reserves and production are relatively concentrated.

7- The oil market is NOT competitive

8- Oil industry's history tells us that to improve efficiency, reduce wastage, and preserve natural resources, the market needs to be managed. If the industry has no manager, governments will step in to manage. Saudis gave up management last week Trump stepped in yesterday

Read 22 tweets

Anas Alhajji

@anasalhajji

10 Mar

THREAD on the impact of low prices on #LNG

1- Low oil prices will hit US LNG, Qatar LNG, and Russia LNG really hard. Russian govt probably did not count the cost of lower natural gas & LNG prices (they are oil-linked) when it decided not to participate in OPEC+ cut

2- With Brent around $37/b, US LNG is NOT competitive with traditional LNG suppliers with oil-linked contracts such as Qatar, Algeria, and Indonesia. Historically, all #LNG contracts around the world were oil-linked until Cheniere came up with the idea of HH LNG pricing.

3- #Qatar & all traditional LNG exporters with oil-linked LNG contracts will be hit hard by the collapse in oil prices. Qatar exports are equivalent to 5 mb/d of oil, if I remember correctly. All LNG companies operating in Australia will be hit especially hard with the oil rout

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