It’s not the fall that kills you; it’s the sudden stop at the end.
This Douglas Adams quote has been swirling in my mind all week. Maybe it’s just a particularly stubborn set of neurons rustling between my synapses that recalls it every time I dwell on an energy crisis that has been surreptitiously developing over the past year.
Do you see it coming, too?
Look, we’ve been laying out the bullish case for oil in 2024 for a while now.
In a nutshell, you can throw everything out of the window and focus on just one powerful catalyst that is going to drive oil prices higher — the tightening supply and demand fundamentals.
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If you recall, the mainstream narrative leading up to 2024 was that the world wouldn’t be consuming as much oil, and that weakening economies like China would ensure a plentiful supply for all.
More than that, however, was the dismissively optimistic views on supply.
Don’t get me wrong, dear reader, last year’s production growth to 13.3 million barrels per day by U.S. oil companies was a pleasant surprise to everyone — hardly anyone saw that one coming.
Unfortunately, one strong year of growth has fed into a delusion that has spread throughout the market.
Couple those supply fantasies with the overly optimistic demand forecasts still being force fed to us by groups like the IEA and EIA and then quietly amended later on — are doing much more harm than you might first think.
And the longer it persists, the worse it’ll be when we hit the stop at the end.
Losing Control of Our Energy Security
Two major pieces of news came out recently that have reinforced the idea that the U.S. has lost a lot of ground when it comes to controlling global energy security.
One came as a bit of a shock, while the other was something we saw coming from a mile away.
First, it was no secret that the OPEC+ group is ready to announce an extension of its voluntary cuts of 2.2 million barrels per day. Those members see no reason to change things up now… and why should they?
Their strategy is working!
The other situation came straight out of Putin’s mouth when he ordered Russian oil companies to reduce oil output to 9 million barrels per day during the second quarter of 2024.
Whether this move is because Putin wants to stay true to his pledge to OPEC+ to curtail output, or the fact that Ukrainian drones just struck a massive blow to Russia’s oil refining capabilities… I’ll let you decide this one.
Either way, it’s leading to even more tightening of supply/demand dynamics.
It may not seem like a problem now, but that’s about to change.
Despite the premium that geopolitics has tacked onto the price of oil today, there doesn’t seem to be much concern; business as usual with WTI crude comfortably trading above $80 per barrel.
In its latest World Oil Outlook, OPEC said that the world will need to invest $14.5 trillion in the oil sector between now and 2045. It’s a staggering amount of investment necessary to keep the market stable.
Roughly 76% of this investment — $11.1 trillion — will need to be directed towards the upstream sector.
And if that isn’t scary enough, OPEC also sees its share of global liquids supply rising to 40% during that time frame.
If true, then we’re almost a decade away from the world forfeiting its energy security to OPEC members.
Most of you already know that I’m not one for doom-and-gloom.
In fact, every single time we’ve faced an energy crisis, we’ve adapted and overcame it.
When the United States’ oil production was in a seemingly irreversible decline for decades, all it took was a bit of ingenuity and a dash of creativity to completely turn our fortunes around and ignite an unprecedented oil boom — one that turned us into the world’s largest crude supplier.
That game has changed once again.
Remember, it’s no longer about debt-fueled drilling at a feverish pace; those days are officially behind us.
Today, it’s about getting more with less. That need has once again sparked the innovation and resourcefulness that drives value for shareholders like us.
But don’t take my word for it, it’s an opportunity you absolutely need to check out for yourself.
Until next time, Keith Kohl A true insider in the technology and energy
markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new
technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the
Managing Editor of Energy & Capital, as well as the
investment director of Angel Publishing’s
Energy Investor and Technology and
Opportunity. For nearly two decades, Keith has been providing in-depth coverage of the hottest
investment trends before
they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution
currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on
key advancements in robotics and AI technology. Keith’s keen trading acumen and investment research also extend all the way into
the complex biotech sector,
where he and his readers take advantage of the newest and most groundbreaking medical therapies being
developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s
to lab scientists grinding out the latest medical technology and treatments. You can join his vast
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