Tag Archives: Persian Gulf

New US Navy carrier strike group now in Persian Gulf to help obliterate what’s left of ISIS

New carrier strike group arrives in Persian Gulf to get rid of ISIS

After about two months of the USS George H.W. Bush aircraft carrier sitting off Syria’s coast to support ground operations against ISIS, the USS Nimitz has arrived in the Persian Gulf to hammer whatever is left of the terror group.

“For the Nimitz Strike Group, today is game day,” said Rear Adm. Bill Byrne, commander of Nimitz’s carrier strike group said in a US Navy statement sent to Business Insider. “When you hear the roar of the jets today it is for real; it’s game on.”

The Nimitz and its accompanying carrier strike group, which the US Naval Institute reports includes a guided-missile cruiser and four destroyers, will support the US-led effort to eliminate ISIS in Iraq and Syria.

Though ISIS continues to coordinate attacks abroad, the terror group has suffered incredible defeats in the territory it once declared as its “caliphate.” In Iraq, ISIS’s foundational city, Mosul, has been liberated by Iraqi security forces with the help of carrier-launched aircraft.

CLICK HERE for US Navy video

In Syria, more than half of ISIS’s last remaining stronghold, Raqqa, has been liberated. In late July, Army Gen. Raymond Thomas, head of US Special Operations Command, said that the US-led fight against ISIS had killed 60,000 to 70,000 militants.

“The enemy is very worn out,” Maj. Gen. Najm al-Jabouri of the Iraqi Security Forces told Reuters on Monday. “I know from the intelligence reports that their morale is low,” the general added.

Meanwhile, a fresh carrier air wing aboard the Nimitz began operations against ISIS on Monday as US-backed forces on the ground continue to make progress.

However, the F-18 squadrons aboard the Nimitz face an increased risk, as the pilots aboard the George H.W. Bush saw the first air-to-air combat since 1999 .

 

[From an article published by BUSINESS INSIDER]

 

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As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
612.239.0970

 

 

 

 

 

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OPEC is wrong to think it can outlast US on oil prices…

Give Saudi Arabia credit: Whoever sets oil-production policy for the desert kingdom has guts. Unfortunately, the sheiks have made what’s likely to become a sucker’s bet.

OPEC has very high costs associated with its oilYou know this part already, but the 12-nation Organization of the Petroleum Exporting Countries last week declined to cut production, sending Brent crude oil futures tumbling to their cheapest point since 2009. The Saudis appear to be spoiling for a fight, trying to find out exactly how cheap oil must be to force surging U.S. shale-oil production to seize up like an unlubricated engine.

“Naimi declares price war on U.S. shale oil,” a Reuters headline shouted, referring to Saudi Arabia Oil Minister Ali al-Naimi.

But there are at least three big problems with this strategy. One, North American crude isn’t as expensive to produce as it used to be. Two, there’s more than you think in the pipeline to make it even cheaper. And third, OPEC nations, including Saudi Arabia, have squandered their edge in cheap oil supplies on welfare states rulers can’t easily cut back.

In 2012, when U.S. shale burst into public consciousness, common wisdom was that it would cost at least $70 to $75 a barrel to produce. As recently as last week, saying U.S. producers could tolerate $60 oil seemed aggressive.

But data from the state of North Dakota says the average cost per barrel in America’s top oil-producing state is only $42 — to make a 10% return for rig owners. In McKenzie County, which boasts 72 of the state’s 188 oil rigs, the average production cost is just $30, the state says. Another 27 rigs are around $29.

That’s part of why oil companies aren’t cutting capital spending much — and they say they can keep production rising without spending more, by getting more out of wells they have already drilled.

A key example is mega-independent Devon Energy, which produces about 200,000 of the 9 million-plus barrels the U.S. drills each day.

Devon wouldn’t give an interview, but said last month that it expects production to rise 20%-25% next year with little growth in capital spending. It has room to work because its pretax cash profit margins have widened by 37% in the first nine months of this year, to almost $30 per barrel of oil equivalent. More than half its 2015 production is protected by hedges if prices stay below $91 a barrel, the company says.

This trend toward efficiency will only get more pronounced, Lux Research analyst Daniel Choi suggests. Technology startups in energy exploration have raised $7 billion in the past decade, generating now-tiny companies that will use advances in seismic data collection and steam-assisted gravity drainage to lower costs even further. Companies such as Liquid Robotics and Laricina Energy are likely to get acquired before going public, but work like theirs will spread, Choi predicts.

Yes, it costs Saudi Arabia only about $2 a barrel to get crude out of the ground. But analysts insist the Saudis’ real pain point is more than $100 a barrel — more than $30 higher than its price now — because of what they do with the money once they have it.

In 2010, for example, the Saudis spent $130 billion to combat the Arab Spring, the Persian Gulf Fund reports. Some of that money went for better education and health care, and a little for infrastructure. Then there was a 15% raise for government employees, higher unemployment benefits, a government-subsidized minimum wage hike and 500,000 new homes in a nation of 28 million people. It cost 30% of Saudi gross domestic product.

Exxon Mobil and Devon have no such burdens. Naimi’s strategy to squeeze North Dakota and Texas is a bet that in the long run, low prices will force a cut in production and a return to Saudi leverage. But it will be much easier to further trim North American production costs than to convince whole nations to eat less.

All this is early, and a snapback in demand could make everything markets think about oil moot. And just because technology changes a market doesn’t mean emerging players are great stock bets — for every Expedia there’s a Travelocity. The drop in oil shares now makes sense; these stocks should be on sale while things play out.

But OPEC still looks like a late-1990s company caught in Harvard Business School professor Clay Christensen’s “Innovator’s Dilemma” — so married to once-innovative business models, it couldn’t adjust when technology re-engineered their industries. Think of the Saudi welfare state as oil’s brick-and-mortar stores: integral to an old business model, but unsustainable in the new.

[by Tim Mullaney, writing for MARKETWATCH]

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As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
612.239.0970

 

 

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