Monday Madness: April 10 ’23

Posted: April 10, 2023

This episode was released 4-10-23 and discusses how China is continuing to encourage peace in the Middle East, and Exxon’s new snack.


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Audio Transcript

Alrighty everyone, welcome back! This is Tavis Kilian with RARE PETRO bringing you another episode of Monday Madness on April 10th, 2023. What a nice Easter weekend it was! I usually try to make a nice roast for myself kind of like my mom did when I was younger. I’m talking that big slab of meat, potatoes, carrots, and mountains of horseradish! I’m usually pretty amped for it, but I instead received an invitation to my girlfriend’s mom’s house where she had prepared a wonderful spread of ham, salmon, cream cheese peppers, rolls, prosciutto-wrapped asparagus, and so many other tasty goodies that I have to stop describing here so that this doesn’t become a 30 minute episode. Big thank you to Tia for having us over and treating us so well. I’ll have to step up my culinary game because last time I brought food over I ended up shattering the pyrex that my special eggs were cooking in and left the monkey bread undercooked, but I still maintain that a little glass and raw dough in the gut ends up building character in the long run. Regardless, I know you folks didn’t come here to listen to the misadventures of a self taught cooking enthusiast nor his eating habits during the holidays. You came here for the biggest stories and statistics in the energy world and I plan to deliver.

First we start with commodity prices. After announcements from OPEC about production cuts and the current state of international relations, it seems we are back again at an $80 barrel, though the activity in the past week was certainly peculiar. We saw lots of spikes to the $81 point, but each time it was violently pulled back down to $80. This happened about once or twice everyday up until the end of Friday. Today WTI opened right smack dab in the middle of $81 and $80 but has since fallen to a little bit less than $80. All of this movement would seem to suggest that we aren’t due for a barrel greater than $80 in the near future, but even that surprises me given the tight nature of commodities at the present. If I had to predict anything I would say that we can expect to sit at this price point until we hear news regarding the American Energy industry, or it could slip right back down to $65 over the course of 3-5 weeks. The spread between WTI and Brent is slowly widening again as we predicted last week. Still a bit narrower than it has been this year at $5, but I imagine it will find stability around 5.5 to $6 soon. Natural gas has done almost nothing significant and now sits in the two-tens, though I must note that it has been far more stable than normal. Gas is cheap at the moment, but it will be servicing more of the world’s energy needs in the future. Nothing super incredible to note on commodity prices, though we seem to have reached a temporary oasis of tranquility which is quite rare.

Next is the rig count. According to the most recent data, we experienced another decline last week. 4 fewer rigs bringing our total to 751, or just 62 more rigs than we had this time last year. The plateau continues. If we dig a little bit deeper into the data we can see that the Permian was the only major basin to gain a rig. Otherwise the Cana Woodford, DJ, and Williston each lost one. State by state is looking like binary code with lots of 1s and zeros with the Gulf of Mexico also losing a rig. Ultimately it seems like we are laying down some rigs that just finished horizontal projects all across the US. Nothing truly exceptional or groundbreaking here.

But that wraps up all statistics that we have this week. How about we get into some news. Our first story involves long time enemies in the middle east. No, I’m not talking about Saudi and Iran who have recently entered into peace agreements thanks to China. I’m actually alluding to an extension of Iran known as the Houthi rebels of Yemen. We’ve talked about them in the past, but I think this serves as a good time for a quick history lesson.

The Houthis emerged in the 90s as an Islamist political group that was opposed to former Yemeni President Ali Abdullah Saleh. They criticized him for being corrupt and backed by Saudi Arabia and the United States. In 2004, the leader of the Houthis was killed by the president after resisting arrest which ultimately sparked the Houthi insurgency in Yemen which lasted all the way to the present day. Today they still preach anti-US and anti-semetic ideals and hold any countries working with the United States in very low regard. As a matter of fact, their slogan is 20 years old now and encapsulates their movement very well. *ahem* “God is great, death to the US, death to Israel, curse the Jews, and victory for Islam.”

So how does this tie into present day news? Well, the Houthis were pretty pissed about their comparative economic underdevelopment, especially when you consider they share a border with the far wealthier Saudi Arabia. Because of that they would routinely attack Saudi facilities with their rebel groups, explosives, and even drones. In fact, you may remember when 50% of Saudi crude processing capacity (5% for the world) was taken out by some Houthi drones, or so the story goes. Now, we have a Saudi led and Omani assisted delegation traveling to Yemen with the goal of negotiating a permanent cease-fire between Saudi Arabia and the Iran-backed Houthis of Yemen. It is almost guaranteed that China aided in negotiating peace with Iran so negotiations with the Houthis would be easier. In fact, last month Iran announced they would no longer supply weapons to the Houthis. So why am I bringing all of this up? I try to keep this podcast objective, so I will not get too deep into the weeds, but it all seems incredibly strange. The US notices a higher than normal religious and political conflict in the Middle East and reinforces its commitment to supply weapons to certain countries and even goes as far as deploying its own troops. This goes on for years and if anything, throws gasoline on the existing conflict. A few administrations later, the US sloppily withdraws from Afghanistan after a few years of tensions cooling off. Then China comes in and negotiates peace amongst countries that have received shitty treatment from the self-appointed world police in a matter of months. Is it possible that the US fueled conflict in the Middle East in order to disrupt global oil supplies so that our energy would better serve the rest of the developing world at a higher price than if they had done nothing? It is entirely possible, and if that is the case, it would be exceptionally easy for China to waltz over and offer better deals and more competent protection should these countries want it. We have an episode of the wacky world of energy coming out very soon that explores several of these ideas, so stay tuned because this is not the time for me to pull out a soapbox and spew my own personal theories. Peace seems to be spreading in the Middle East, and China is at the center of it all.

In other news, Exxonmobil has held a few informal talks about acquiring Pioneer Natural Resources. That’s right, ExxonMobil, the largest US producer who is only beating out Chevron in market cap by over 100 billion dollars is considering acquiring the 7th largest company by market cap. Pioneer is the biggest producer in the Permian, and the largest pure-shale company in the US. Again all informal communications at this point, but this is huge. Don’t get me wrong, I am personally long on gas and this to me would seem like a genius move for decades to come, but that is exactly the problem. If you combined the market cap of ConocoPhillips, EOG, Occidental, Schlumberger, Marathon, and Valero it would still be 40 billion less than the raw combined value of Exxon and Pioneer market cap at 469 million (all according to data from last October). I know it is technically not a monopoly but it sure seems eerily close to a certain oil company of the past. A certain Standard oil company. If you see them swallow up Pioneer and immediately set their sights on Oxy, we might have a problem. Supermajors this big are the reason we end up encountering such stringent policies and regulations. Exxon, Chevron, and Conoco have deep enough pockets to stomach the ever increasing severity, but it is the little guys that end up running into a wall just to have their assets absorbed by the super majors. I personally want to see American energy remain wholly independent rather than corporate, but we will just have to wait and see what happens.

Perhaps a longer episode than usual, but I have been particularly enjoying writing these as of late. If you have any personal feedback or suggestions regarding the content, please email us at Otherwise all you need to do is frac that follow button to continue receiving free and engaging energy content. This is good stuff for those looking to get a leg up on others in the industry, and the best part is that it is absolutely free to consume. We are absolutely delighted to make these podcasts, interviews, and periodicals for you. This has been Tavis Kilian with RARE PETRO, and until we see you next time, take care everybody!


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