Scott Sheffield Pioneer CEO: Russian ban means $200 oil

Scott Sheffield $200 oil
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Scott Sheffield Pioneer CEO: Russian ban means $200 oil

White House Considering Ban On Russian Crude Which Pinoeer CEO Warns Would Send Oil To $200

Another day, another flashing red headline that the White House is considering a ban on Russian oil imports – something it has repeatedly said earlier this week – although it has yet to make a decision:

*WHITE HOUSE CONSIDERING BAN ON RUSSIAN OIL IMPORTS
*WHITE HOUSE SPOKESPERSON SAID NO DECISION HAS BEEN MADE

The news sent WTI spiking as high as $114.64.

Read Russia says world oil embargo could push prices over $300

The Biden administration also said it was looking at options they can take right now if they decide to cut the U.S. intake of Russian energy, say Cecilia Rouse, chair of the White House Council of Economic Advisers.

“We are considering a range of options but what’s really essential is that we maintain a steady supply of global energy,” Rouse says at briefing, adding the U.S. does not import a lot of Russian oil (but it does import enough for it to be meaningful).

While even Psaki admitted that such a move would send gas prices sharply higher, perhaps Biden is feeling emboldened by the latest reports out of Vienna on the fate of the Iran nuclear deal, where Russia’s chief negotiator in talks to revive a 2015 nuclear deal between world powers and Iran said on Friday that he thought a deal was possible in the middle of next week.

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Meanwhile, those wondering what a full-blown US ban on Russian imports would do to oil prices, read today’s FT interview of Pioneer Resources CEO Scott Sheffield, who said oil would “easily” go to $150-$200 a barrel if there’s a Western world ban Russian oil and gas.

“The only way to stop Putin is to ban oil and gas exports,” the CEO of the largest US shale company told the Financial Times in an interview on Friday. “[But] if the western world announced that we’re going to ban Russian oil and gas, oil is going to go to $200 a barrel, probably — $150 to $200 easy.” This confirms what we said yesterday in Two Oil Price Scenarios: One Bad, And One Catastrophic.

Sheffield also said that the US would be unable to replace crude supplies from Russia this year, even as he backed calls for an international embargo on its energy exports.

“I’m talking about a two- to three-year plan. Because US shale, even if somebody adds a [drilling] rig . . . it takes six to eight months to get first production. There’s labor shortages, there’s frack fleet shortages, there’s rig shortages, there’s sand shortages.”

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Russia exported about 5mn barrels a day of crude oil before it invaded Ukraine last month. While China might still absorb some of that volume in the case of a western embargo, there would still be a significant supply shortfall.

“We need to add probably two, two and a half million barrels a day,” Sheffield said. But he warned that an accelerated drilling campaign would require investors’ blessing. “We’d have to go to our shareholder base and ask what their thoughts are,” he said, hinting strongly that it is Biden’s own “green deal” lunacy that is the reason why the US lost its hard won energy independence that was perhaps the high point of the Trump administration.

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Of course, if oil does hit $200, we are looking at a global depression, similar to the global financial crisis of 2008 when oil hit $140 just before it crashed to $30 as the inflationary tsunami became a deflationary shockwave almost overnight.


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Dean Nestor

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