Crude Logic
This is a podcast that highlights all things oil and gas! We talk to industry leaders, service-providers, and anyone who works within this industry. The two hosts have over 40 years combined experience in the industry.
Crude Logic
Iran Negotiations and a Wrongful Termination
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
In this episode, Tim and Taber delve into the complexities of the oil and gas market, geopolitical tensions, and industry news, providing insights into how global events influence market dynamics and business practices.
keywords
oil and gas, market update, geopolitics, US Iran talks, crude oil prices, industry news, mergers, acquisitions, market volatility
key topics
Oil market volatility and factors influencing prices
Geopolitical tensions and their impact on oil supply
Industry mergers and acquisitions in midstream sector
Market reactions to US Iran talks and international negotiations
The influence of political decisions and news on oil trading
"Crude's holding the line near 70 bucks"
"Market is trading on headlines from Doha"
"Negotiations didn't go well, so we dropped a missile"
Chapters
00:00 Market Update and Industry Insights
03:34 The Politics of Conflict
05:18 Market Reactions to Geopolitical Tensions
06:51 Oil Prices and Market Stability
09:22 Tragic Events and Corporate Responsibility
12:28 Midstream Acquisitions and Market Dynamics
14:30 NEWCHAPTER
Resources
Pump Jack Apparel - https://pumpjackapparel.com
Whitewater Ford, Colorado - https://whitewaterford.com
Baker Hughes Rig Count - https://rigcount.bakerhughes.com
If you thought the 4th of July was going to be a quiet week for oil and gas, buckle up, because it's anything but this is Crude Logic.
SPEAKER_00This is Crude Logic. Welcome to the show.
SPEAKER_02Good morning, and welcome back to Crude Logic, your daily shot of clarity in an industry that runs on chaos. Today's show is fueled, as always, by Pump Jack Apparel. If you work in the patch or just love the people who do, go gear up at their site. Rep the industry that runs the world. And the tunes bringing you in and out of this episode today come from Whitewater Ford, Colorado Delta Blues with a little grit, streaming everywhere right now. More on both later. Let's get into it.
SPEAKER_01Okay, market update for today. We are at $70 even with West Texas. That's down 1%. Brent's at $73.35 up a quarter of a percent. And uh Henry Hub is at $3.25 up 2.2%. The current rig count is at 573, according to the latest numbers from Baker Hughes. Uh crude is sliding this morning on concerns of rising supplies. Traffic in the Strait of Hermuz has rebounded after the 15th U.S. Iranian ceasefire. And Morgan Stanley cut oil price forecasts for the second time in two weeks, calling for a global growing supply. It's almost like they flip the light switch on and off when they do this. They're just like, you know, today I think we're gonna have a shortage. Tomorrow, uh, it's an oversupply.
SPEAKER_02Right. I think a lot of it has to do with uh the Strait of Hormuz, Iran, you know, the wars of the United States.
SPEAKER_01I feel like it's been the worst years, though. You know, they're like, you know, we need our stocks are falling. Uh bombing in Iran. Our stocks are getting higher than we want. Uh oversupply.
SPEAKER_02US Iran talks resumed today in Doha. They're picking back up after Tuesday's session, which I guess uh left both sides publicly disagreeing on transit fees through the strait. Iran says it'll waive fees for 60 days. Thanks. I don't even know what that accomplished. I guess that's the agreement under the current deal, but it's holding the door open to charges later. Something that US, Europe, and the Gulf states are not thrilled about. I guess what we're all going to be hanging on then is these uh talks that are going on between the US and Iran in Doha. Yesterday, I guess they had some talks, some some uh disagreements on on the fees and and all this stuff. And it really it really doesn't make a lot of sense because I thought we had military dominance over them.
SPEAKER_01I don't understand how these negotiations always I mean, I it seems like any negotiation in the Middle East is this way, but they have uh, you know, one day they're like, hey, we're we're talking about everything, we've come to an agreement, and the next day they're like, Oh, the agreement went bad because they bombed a ship. So if they weren't happy with the terms, why don't they just make a phone call? I don't I don't get it.
SPEAKER_02The politics of it all are are just kind of ridiculous in the sense that, okay, well, we've bombed them, they have no navy, they have nothing, they're they're worthless, they can't fight, they're terrified, the people are starving, and which is probably true, but well, you know, we got them basically by their ass. And then they go out and go, no, you don't, and then they shoot at boats, and then we're like, oh well, you know, uh, I saw uh the the VP a little recently, he's like, you know, these these ceasefires can be kind of kind of difficult, you know, they can be kind of touchy, you know. It's not what does cease mean? I mean, uh anyway, I I the the just it it's almost like they're toying with this. I I really, really got Trump's back here. I I think that something needed to be done about Iran if something's done about Iran, instead of, you know, two or three months of target practice, and then we just go back to the way it was.
SPEAKER_01I mean, there's a lot of people in the beginning of this uh little skirmish saying that that's how it would play out, that no matter what we did, it would nothing would change and it would just be the way that it always has been. And I don't know if that's true or not, but it it seems to be so far more true than not.
SPEAKER_02Let's be honest, that that area of the world, you know why there's not ground troops right there, or why there's not ground troops right now? Our military are capable of doing anything. And I do believe that we could probably impose our will on Iran. However, I don't think that even me, I don't think that we're prepared for the loss that that would be involved there. And so I'm glad that they haven't jumped right into the ground troop thing and all that. But it's really screwing with the markets right now. I mean, every little every little breaking thing that comes out of Doha is going to shift the market one way or the other. And so while the price per barrel of oil has decreased, the market, in my personal opinion, and I'm not a stock market guy, it just seems to make sense to me that the market based on this situation is not stable. So anything that comes out of Doha could jack the price per barrel up ten dollars uh a barrel uh overnight. So obviously that's not happening, but it it really could. So even though we have this drop, the it hasn't shown up at the pump yet, and you know, they they always say it, you know, rises like a rocket and drops like a feather. I understand the dynamics behind that, but um the market is shifting, it it's it's not stable, and markets always shift, but this can be something that causes markets to shift really big back and forth every day.
SPEAKER_01So you've got like one half the analysts are saying that it's gonna continue to drop, and we've like the I saw one yesterday said the bubble has burst. Um, and then I've seen other people who are like, no, it's it's gonna be $150 a barrel next month, you know. And you're like, I don't, I don't know who to believe, but activity's slightly, so I mean it it's it's good.
SPEAKER_02But everything looks good, um, you know, as far as rig count goes. We've already kind of talked about the the efficiency and how that's you know causing, and and we're gonna cover it a little bit more later in this episode, but the efficiency and the capabilities of these new rigs, new technology, you can do more with less. We are the number one exporter now. I guess I would have to talk to a financial person to find out, but it confuses me that if we have an abundance of the commodity and we are exporting more than any other country, then why aren't our prices lower at the pump? Why yeah, why aren't our prices lower at the pump?
SPEAKER_01I've never understood the whole rises like a rocket, drops like a feather deal. It doesn't make any sense to me. I mean, we we've all done this long enough to know, like, hey, the prices uh or the price of oil is going up. We know that's going to make XXX cost more. Let's raise the price of the pump immediately, and and that way we're not negative. That I get. It doesn't make any sense on the other side. If it's falling, it's falling. You know, the same adjustments can be made. We just don't do it.
SPEAKER_02Their argument is that, well, these mom and pops or these individual, these gas stations or places that purchase the gasoline, their, you know, the price per barrel has gone up. So they have to raise their prices because the price per barrel went up. But the gas that's sitting in their tanks, the day that the price per barrel goes up wasn't bought at that price, but they raise the prices immediately. Then whenever the prices go down, they say, well, they had to pay these higher prices for the stock they have now.
SPEAKER_01So they at some point they all got together, not at the individual stores, but the industry as a whole got together and said, Hey, look, this doesn't work because you know you're you're waiting until Tuesday to raise your prices. So we're all going to raise our prices at the same time.
SPEAKER_02If they're raising the prices immediately because the price per barrel went up, even though they didn't pay that price, and then later they take time to come down because they're because they had to now that because of the inventory that they have, they had to pay more. Well, if they raise it that quick, they can drop it that quick, and it seems to be a net zero loss because they made money on the stuff that they bought cheap. So anyway, isn't it though?
SPEAKER_01No longer uh for profit, we are now more profit. You heard about the shooting in Midland uh two weeks ago, right?
SPEAKER_02Yeah, with the 11 people shot or whatever, and I don't know how many died. I can't remember.
SPEAKER_01Uh only one died outside of the shooter. The shooter um killed himself. But the uh one of the guys that was shot, they uh he's um so he's been in the hospital ever since, had several surgeries, like life-threatening ICU. He's been in the hospital for 10 days now, I think, since the shooting, 14 days. I don't remember exactly when the shooting was. But uh anyway, yesterday his company fired him.
SPEAKER_02Really?
SPEAKER_01Yeah. So he like they ask him to resign, which he of course said uh no, I'm in a hospital bed from a active shooter situation. I can't help that I'm not out selling the guy for them. Sorry, I'm late for work or can't make it today or whatever. Anyway, they they asked him to resign, he declined, so they let him go. And it's like all over the news down here in Midlands, like you know, not I can't imagine, like, I don't care if they were planning on letting the guy go already, you know, he gets in an active shooter situation and gets shot, it's like terrible publicity for your company to let the guy go.
SPEAKER_02You know, yeah. What are you thinking? It's just completely insensitive. Like what so you've been shot in a totally you're totally a victim, not because the article I was reading about it was um was saying that he was uh I think it was his eighth wedding anniversary, uh the day that they let him go.
SPEAKER_01And it was like, dude, you gotta be kidding me. Like, I mean not to try to I mean, I think it's terrible that they would do this for, you know, publicity reasons, but just in general, being a decent human, it's a terrible thing that they did it. Uh that doesn't make any sense. I'm sure they're gonna be bombarded with people calling them and you know, commenting on every post they make and whatever.
SPEAKER_02That's unacceptable. And they they should pay a price for doing that to this guy. I don't even care if he was the worst employee they ever had. If this is what excuse you're gonna use to get rid of him, like uh what's wrong with your HR department?
SPEAKER_01Yeah when I first heard about it, um, I was thinking, you know, there there's gotta be some sort of it's gotta be a small mom and pop that just started and they just don't have the insurance and they can't, they just can't help the guy, you know. And like I was almost sympathetic at first thinking like, you know, this could be like a tragic thing that puts their whole company out of business, and they got eight or ten people who are unemployed. They had to make a tough call and and let the guy go. So I look up the company and I'm like, nah, that's not the case.
SPEAKER_02These guys have money. It's an international conglomerate.
SPEAKER_01Yeah. I mean, it's not, but it's big enough. You know, they got like several trucks, and you know, they're they're fine.
SPEAKER_02That's that's a pretty horrible story, man. That I mean, it's it's heartless, really. It really is. Uh, but anyway, back to the things that are affecting the market.
SPEAKER_01So there's more uh we didn't really talk about it yet, but uh yesterday we talked about the uh Williams and momentum deal. And then yesterday afternoon, um San Mateo Midstream and Cardinal Midstream announced a merger or well, a purchase, an acquisition of Cardinal for $752 million. Has the activity for acquisitions on the midstream side just suddenly peaked? That's been going on in the drilling for two years now. Well, even longer, but big, big moves in the last two years. So I don't know, midstreams look like it's just now getting to that that stage.
SPEAKER_02Bottom line is that the market isn't trading on fundamentals right now. It's basically trading out off of what you know, the headlines coming out of Doha. So every alert this week is going to move the needle.
SPEAKER_01But trading on presidential tweets and whichever Hamey or whatever is ruling now.
SPEAKER_02Probably more Donald Trump tweets because really that's the only information we get out of these talks.
SPEAKER_01It's actually more information than we get out of the news, too.
SPEAKER_02That's it, it's more direct. Yeah, it's not clouded by anything.
SPEAKER_01I love his tweets because he's just like, Yeah, the negotiations didn't go well. Um, so we dropped a missile on this guy's house and we're gonna negotiate with his son tomorrow.
SPEAKER_02It's like, okay. Yeah, who's next? Next man up. We got acquisitions happening in midstream, we've got talks going on in Doha, we've got fluctuating prices for oil. It's it's another day of chaos. If you are an employer and you have an employee that gets shot as a victim in a mass shooting, recommendation is don't fire that guy. Yeah. Good business practice. Not good at all. Very bad PR. So uh with that being said, everybody, thanks for tuning in again to this episode. And remember, stay safe, keep drilling, and it's only logic if it's crude logic. We'll see you next time.