Recent Posts

Sunday Sankey 7/25/21

Greetings, It is all about the presentation this week; please click on the attached file for a look at what is in store for the week ahead – earnings; OPEC chat; what to buy when US natgas prices hit $4/mmbtu, which they did this past week; factor performance disconnection; and our only solution since we wrote The Renaissance Thesis of US E&P in 2017, namely hard cash return to shareholders. These oils have to bribe […]

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12:39 PM

Friday Sankey 7/23/21

The “Why we prefer buybacks” note yesterday got a lot of feedback. There was some comment that it had no conclusion, to which my response was 1) it should have been titled Part 1 because this will be a continued theme for us through earnings and beyond because 2) my old line “you don’t buy cheap stocks and sell expensive ones, you buy good management” is the key. The chart on Sankey Stars would indicate […]

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9:12 AM

Market to Government: “FEED ME SEYMOUR”

In the valuation Little Shop of Horrors environment we live, the monstrous plant of the market needs the government to feed it constantly. It was pointed out yesterday with me in conversation on this government-driven environment, that the recent rollover in value vs growth indexes occurred right when The Parliamentarian – the voice of the Senate – declared a claim by Chuck Schumer that an obscure procedure to allow a second reconciliation to pass an […]

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9:06 AM

Travels with Eric Blair 7/18/21

They say, if you are the manager of a rock band, and the drummer comes to you and says “…I’ve been thinking…”, It’s over. Yes, with a week off in Mexico, I’ve been thinking. One thing that helped me think, I deleted the Twitter app from my iPhone. It was a great move, so that rather than only increasing the constant noise that we face covering markets, when I would instinctively check my phone, my […]

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1:32 PM

Postcard from Mexico 7/11/21

Things in Morelia, Michoacan, Mexico, are okay, the upper-middle-class here do not like Mexican President Andrés Manuel López Obrador (AMLO) but ultimately, as we know, do politicians make a difference? Yes and no. Things are never as bad as you fear, and never as good as you hope. Broadly speaking, thinkgs are okay. Mexico has a major population – 127m – and huge natural resources, particularly we note agriculture, major wealth. There is a large […]

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4:11 PM

Viernes Sankey 7/9/21

It was the optimum Happy Hour last night, with two expert witnesses, Kathleen Kelley and Jan Stuart, both highly tenured oil market experts, and a mix of long-only and long-short investors, mutual fund and hedge fund. We were also spread across the globe from Amsterdam to Mexico, with Kathleen struggling in a New York flash flood situation that resulted in a viral video of a lady wading into waist deep water to the NYC Subway. […]

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12:03 PM

Manana Sankey 7/6/21

Reading back on my Sunday note, I did a horrible job of highlighting the link to the “Oils share of the S&P500 earnings vs oil’s share of the S&P500” presentation that was attached. One key highlight was to buy Pioneer and EOG and to be negative on Oxy. The non-consensus call was bullish Apache. We were also cautious refiners. Here is the note which is a short presentation of all the charts. This is a […]

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9:57 AM

Sunday Sankey 7/4/21

Happy July 4th Here’s to democracy and freedom. Usually, I make some dumb joke about being British and not celebrating any Independence on July 4th, but this weekend marks the first anniversary of Sankey Research. My first note, quoting Public Enemy as a statement on freedom of speech, was sent out the Friday of July 4th weekend 2020, and for long as it may continue, the anniversary of Sankey Research will be Independence Day weekend. […]

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12:30 PM

Morning Sankey 7/1/21

 Having heartily joked that I have been snowed under all week… with soccer… yesterday was absolutely jammed with newsflow, and this morning we got an answer on our question of whether Saudi wants $80/bbl+ oil. The OPEC meeting story seems to be no July  increase, with the market having lowered expectations to 500kb/d. Great call from Goldman on $80/bbl, which we always agreed with as regards demand. Once again yesterday in the US DOE data […]

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12:04 PM

Morning Sankey 6/30/21

ConocoPhillips is hosting a market update call today at 10am ET, and the press release reads great. I hate to repeat a press release, but this one is so pretty, and concise, it bears highlighting. Increasing anticipated Concho transaction-related synergies and savings to $1 billion annually; Reducing 2021 capital expenditures and adjusted operating cost guidance by $200 million and $100 million, respectively, due to stronger-than-projected business execution; Increasing 2021 planned share repurchases by $1 billion, […]

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9:54 AM

Sunday Sankey 6/27/21

Please join the Sankey Research party in DUMBO this Thursday as we celebrate the crazy past year, since first publishing the first Morning Sankey as independent research, on the Friday, of July 4th weekend 2020. What a muted occasion that was. Now New York is raving, and that is before international tourists return. RSVP for the party. It’s meant as an opportunity for people to come to see the remarkably transformed and very cool Brooklyn […]

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1:27 PM

Souki Sankey 6/25/21

Overview: we hosted Tellurian Chairman Charif Souki on Happy Hour. Key conclusion: we are, like Souki, past and future mega-bulls on long-term LNG demand and US LNG supply. As such, Tellurian provides an excellent high-risk/return play on the mega-theme. However there are major risks regarding contracts (2 are signed, 5 are needed), project capital cost and execution (the claimed $550/tonne of gasification capacity cost needs to be sealed), and financing/level of shareholder dilution. Compared to […]

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1:19 PM

Morning Sankey 6/24/21

Tonight 5pm June 24th on Happy Hour we have Charif Souki, Chairman and co-founder of Tellurian, the integrated Haynesville gas-to Driftwood LNG export project play. Should be a great chat! Register here Charif Souki on Sankey Happy Hour Next week, on Thursday July 1st, please attend the Sankey Research 1st anniversary party in Dumbo, Brooklyn. Email me for details on this informal get-together in one of the great destinations in NYC. Guess who is talking […]

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10:15 AM

Morning Sankey 6/23/21

Tomorrow June 24th on Happy Hour we have Charif Souki, Chairman and co-founder of Tellurian, the integrated Haynesville gas-to Driftwood LNG export project play. Should be a great chat! Souki is one of the select legendary executives to be featured in The Frackers, an entertaining book about the key characters in the US unconventional revolution.  Register here Charif Souki on Sankey Happy Hour Next week, on July 1st, please attend the Sankey Research 1st anniversary […]

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9:03 AM

Sunday Sankey 6/20/21

Happy Father’s Day, Markets are roiling on Fed comments, and how we get off the heroin of money printing to stimulate the economy. It will be very hard, and markets clearly will not like it. We hosted Steve Levine on Happy Hour this past week, he’s excellent. He does not support my argument made on Thursday last week in the morning note, that EV adoption by consumers will be slow. He asserts that EVs will […]

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3:03 PM

Friday Sankey 6/18/21

Fun fact: Australia’s biggest export is boomerangs. It’s also their biggest import. What actor could never play Quasimodo? Humpfree Bogart Doctor: Your body ran out of magnesium. Me: 0mg. The urge to sing The Lion Sleeps Tonight is just a whim away. A client writes: Paul! One day doesn’t make a market, but your next letter can’t come soon enough. Is the run in oil done? Dear clients, Key bear triggers were twofold yesterday. First, […]

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8:42 AM

Morning StEVe LEVine 6/17/21

Tonight Happy Hour 5pm we are delighted to host Steve LeVine, world battery expert and author of “Powerhouse, America, China and the Great Battery War”, editor at large, Medium, “covering the turbulence all around us, electric vehicles, batteries, social trends”. He writes for The Mobilist, and is ex-Axios, Quartz, WSJ, NYT. 5pm ET tonight, https://us02web.zoom.us/meeting/register/tZEtc-2vqz8jGtxwSq3R416BOuVoJD9v1vnE Steve and the debate that follows will allow me to finish my thematic “Electric Vehicles, not so fast”. The fact […]

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9:22 AM

Morning Sankey 6/15/21

At the last in-person Shell analyst meeting at the NYSE, I raced the head of upstream in a life-sized side-by-side Pennzoil NASCAR simulator and then moved on to talk to CEO Ben van Buerden. One key message: sell the Permian. My argument was that Shell would never be recognized as a Permian player, would never get credit, even if they out-performed the industry, and valuations were riding high. Shell should be a mega-project player in […]

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8:46 AM

Sunday Sankey 6/13/21

The note today is delayed by England vs Croatia, thankfully the currently ongoing Austria vs North Macedonia game is not imperative for me to watch.  There are some great slides in today’s presentation. For example on how solar projects do not deliver their IRR, on worrying Indian oil demand, on the global petchem balance by company, and our new mega-theme, of new young CEOs following through on our “Renaissance” theme of US E&Ps. This new […]

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2:22 PM

Friday Sankey 6/11/21

What do you call an Engineer who doesn’t know how to use a calculator? A project manager. What did the medieval knight say when he got caught doping? “I was just getting my lance arm strong.” What’s the worst thing about wild alligators? Their wild allegations. Did you hear about the guy who invented the knock-knock joke? He won the no bell prize. There were two big moments in the market yesterday, the inflation number, […]

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8:44 AM

Morning Sankey 6/10/21

Well, I made it to and from Texas Tuesday/Wednesday, getting back yesterday evening, which was a Board speech and dinner at a famous country club. But the flights were pretty hellish, be warned. My outbound was cancelled, which bounced me to economy, Those tiny first class cabins are 4x over-booked. Newark TSA was typically crammed, it turns out my Global Entry is expired, putting me in the line of people wearing lace-up boots and multiple […]

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9:05 AM

Morning Sankey 6/3/21

Last week, we highlighted Tellurian traction on Reddit Wallstbets. Today, they announced a further deal. Tonight we have Mark Viviano of activist Kimmeridge on Happy Hour (5pm ET) for a general discussion, such as pertains to a 3rd ExxonMobil board seat going to the activist slate (announced yesterday), views on the market dynamics that are occurring thanks to activism, etc. Mark has deep experience as a long-only investor at Wellington management. This is expressly NOT […]

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8:46 AM

Morning Sankey 6/2/21

The ostrich school of analysis would suggest that I resolutely defend my short term bear call on oil and oil stocks made only at lunchtime on Monday, but the fact is that no sooner had I hit send on the email to clients and website post, than the short term thesis caught fire and sank like Iran’s biggest warship just did: June 2, 2021, Associated Press: “The largest warship in the Iranian navy caught fire […]

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8:44 AM

Memorial Monday Sankey 5/31/21

OIL RISK HIGH. We have an OPEC meeting tomorrow, and the word is that Iran is pumping into storage on anticipation of successful negotiations with the Biden administration, which, for reasons I do not fully understand, is very keen to make a nuclear deal. This will allow Iran back into global oil markets. We understand that OPEC is warning Iran not to flood the market, and Iran is saying “we are going to flood the […]

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1:34 PM

Morning Cimarex-Cabot 5/24/21

Cimarex and Cabot to merge as equals, the new company will be called Cimmabon. No, Cabarrot. Only kidding, they have not announced the new name.  Call at 8:30am ET – imminently. Also we mention Tellurian, which is rising in the meme stock world – most mentioned on Reddit (see lists below). Overall, we love LNG plays, but US export competition is fierce, and our key play is Cheniere, $LNG. Years ago under Souki they snagged […]

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8:18 AM

Sunday Sankey 5/23/21

Watching Iran, but 1mb/d of oil exports are already in the market. Huge week ahead for ExxonMobil, with the Shareholder Meeting and board vote on Wednesday this week. We wrote about it on Thursday, see the note on www.sankeyresearch.com or emailed. Noted that Halliburton shareholders rejected the company’s pay proposal last week, which is encouraging. The pay of oil executives relative to shareholder returns has been an abomination for years. Executives should try a few […]

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12:19 PM

Morning Sankey 5/19/21

Quick note to highlight that Delek CEO Uzi Yemin will be on Happy Hour this week, Thursday at 5pm ET. SAVE THE DATE: Sankey Research 1st Anniversary Party for July 4th Weekend celebrating independence. July 1st in Dumbo, Brooklyn, 6pm. Please RSVP – this is a great area of New York, terrific place to visit to refresh your New York experience, right under the Brooklyn Bridge in the stunning park from which many Sankey Research […]

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8:23 AM

Sunday Sankey 5/16/21

Good day, The week ended with the guided announcement from Marathon Petroleum that its deal with Seven & i to sell the massive Speedway gasoline retail network had closed for $21bn cash, and upside guidance from Marathon Petroleum on an imminent Dutch Auction for $4bn of stock, within a $10bn open buyback authorization. It was uncertain how much debt would be paid down, but that was announced light at $2.5bn. MPLX, the 63% MPC-owned MLP, […]

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12:59 PM

Friday Sankey 5/14/21

“Darling I think the new clothes drier is shrinking my clothes.” “No honey, that is caused by the fridge.” On the other side: “Does this outfit make me look fat?” “No your fat makes you look fat.” Don’t spell part backwards. It’s a trap. Our tortoise was falling in love, but now he’s only falling apart. There’s nothing I can do, it’s a turtle eclipse of the heart. Yesterday it felt like the market confirmed […]

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8:28 AM

Morning Sankey 5/12/21

*INVITATION * Today * 10am ET * – Happy Coffee with Li-Cycle CEO Ajay Kochhar. Ajay is extremely strong on all things to do with his business, of re-cycling lithium-ion batteries. By extension, he is extremely strong on batteries, EVs, and particularly Li-Ion factories. He is absolutely at ease with battery market dynamics. Join a conversation with Sankey + a few clients. Yesterday the company announced an agreement with Ultium Cells, a joint venture of […]

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9:01 AM

Morning Sankey 5/11/21

Noted: private equity selling down $PXD, and Antero $AR issuing. No sooner had we highlighted the Goldilocks oil market, with strong refining margins implying good demand, the potential for further upside in demand from COVID recovery especially in global jet fuel, and the “Saudi Put” back in effect since January, than a bunch of Russian hackers show up and spoil the fun. The issue is that major negative volatility events like this are negative – […]

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9:02 AM

At the close Sankey 5/6/21

Some quick notes: Low Key Happy Hour tonight, tell me if you are interested. 5pm ET. Clashes with some results. Notably EOG and ET Energy Transfer. Market expects a huge beat from ET on Texas storms, after Kinder blew it out. On EOG, we have seen some market darlings such as XEC with mixed results. Expectations would be high that EOG management quality handled the storm well. There is low expectations for a Devon-style surprise […]

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4:16 PM

Sunday Sankey 5/2/21

All presentation today, see attached link, after the Sunny Saturday Sankey published yesterday and emailed to you, outlined the past week. The week ahead is extremely busy with results – you can see my diary in the attached presentation. The monster week of earnings is behind us, with impressive results from FMAGA – Facebook, Microsoft, Amazon, Google, Alphabet. Week ahead also has Secretary of State Blinken travelling to Ukraine. “I can’t tell you that we […]

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12:25 PM

Sunny Saturday Sankey 5/1/21

Winner winner chicken dinner: Hess this past week. ExxonMobil, we think won of the mega-oils. Hess is the “last great oil NAV play” on Guyana, the stock is worth $100/share+ if you believe $80/bbl is coming down the strip; Goldman clearly does, we get there too, with a weak US$ and not dissimilar balances – a demand boom is coming. Wildcards vs GS are Iran and India, alongside the potential for rising US interest rates […]

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3:11 PM

Morning Sankey 4/29/21

If you have the strength, Happy Hour Tonight 5pm Register Here:  https://us02web.zoom.us/j/84981726924 Let’s see who can be the most bullish on the call! Using $60/bbl long term we can get to a $90 net asset value for Hess, but that work is subject to a conversation with the company. At $70 long term oil we get to $100 NAV/share. It is not as crazy as the old Hess, which ostensibly was trading at a 50% […]

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8:56 AM

Sunday Sankey 4/25/21

Monster week of earnings ahead, a clash in the titanic battle of growth vs value. The forces of growth over-ran us values, but we started a fightback that saw several battles won since the terrible relative lows of August 2020. In Q1 this year, value began to rampage against growth. April has seen a growth fightback, with the US$ holding and US interest rates even rallying. I asked a market player if he was bullish […]

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1:52 PM

Morning Sankey 4/23/21

Well, it’s feedback Friday! The age-old client meeting line gets used again: Client Q: “Paul, what is the most common question that clients are asking right now?” Paul A: “What is the most common question that clients are asking you right now?” True joke, but being Friday, we are not done – here they are: Newsflash: US customs have intercepted $2m of lumber being smuggled in shipments of cocaine What do you call an anti-vax […]

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9:12 AM

Morning Sankey 4/22/21

Comparative advantage in ideas. Under the fundamental trade principle of comparative advantage (Ricardo, 1817), if you have two goods, and I have two services, we trade; to have one good and service each, more efficiently produced for each. Under a theory of trade of ideas, If we have two ideas each, and we trade; we each have four ideas. THAT’S RIGHT FOLKS, HAPPY HOUR IS BACK, TONIGHT AT 5PM. Muttering to myself about the latest […]

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8:25 AM

Morning Sankey 4/20/21

Staring at the blinking red and green Bloomberg ticks, alone in a home office, bombarded with Bitcoin headlines, Gamestop headlines, etc etc, it had become very difficult to make out the wood from the trees regarding the oil and energy call. I went on a road trip. I’m back. As suspected, the oils and energy have been tricky – notably solar has been ugly for the past month and year to date, albeit off a […]

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8:42 AM

Sunday Sankey 4/11/21

This week I am heading to Oklahoma to meet Devon CEO Rick Muncrief and then Houston to bid farewell to outgoing ConocoPhillips COO Matt Fox. Opposite ends of the spectrum for me – never met Rick, have hung out many times over the years with Mr. Fox. The lowlight in professional terms with Matt was doing the first marketing trip for COP in NYC after the dividend cut in 2016. The highlight was Matt making […]

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1:36 PM

Morning PSJeff 4/9/21

What’s Sisyphus’ least favorite band? The Rolling Stones We visited Japan for two weeks and did not see a single ninja. It was really impressive. “Officer, you can’t give me a ticket. I have to go run the marathon tomorrow.” Cop: “That’s not how you play the race card.” The Ketchup shortage this year was so predictable. Heinz sight is 2020. Happy Hour yesterday evening, we had a player whose firm had done a deep […]

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8:28 AM

SPAC Alert: The Life Cycle of Li-Cycle

Looking for SPAC names, we had highlighted Quantumscape as interesting from the point of view of long-term potential. However, like so many alternative energy plays, revenues are years away from scale commercialization (a pilot project for the $19bn market cap company is due by 2023), and the company recently issued 13m shares at $64 to finance its high-cost development work (the stock fell to $47 over the next two days). We had the impression “funding […]

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7:54 AM

Sunday Sankey 4/4/21

Greetings on Easter Sunday, The oil market got excited at the end of the week with the OPEC decision, basically because the “Saudi Put” remains in place, with the tapering of OPEC and particularly Saudi cuts extended through July. While surprised at the scale of the bullish reaction, given that the market had anticipated a rollover of cuts, it has been notable that oil prices have held the $60/bbl range pretty firmly with a bouncing […]

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12:26 PM

The cliché-myth of the Roaring 2020s

History does not repeat, but it rhymes. Consideration of the Roaring 1920s makes it clear that the major technological, economic, and social advancements of the era were remarkable. There was an incredible convergence of technological development combined with an economic boom into an upsurge of social liberalism. Equally, the Roaring 1920s came after the great 1918 influenza (H1N1) avian-origin flu pandemic of 1918-1919. There is a synchronous argument that says the global economy recovering from […]

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9:10 AM

Morning Mood Swing 3/30/21

Get ready for a dump of April Fool’s Day OPEC jokes as the Organisation meets formally this week, culminating on Thursday April 1st. Rollover is seen as the most likely outcome, which would be for April, Saudi extending its market control, with recent volatility in oil prices – ie downside moves – seen as the key concern. It’s a never-ending wonder trying to forecast oil markets, and now to be in new era. Here, we […]

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8:26 AM

Sunday Sankey 3/28/21

Hello Happy Sunday, Calling oil has become very tricky in the short term. Never mind the wider market, where the steadily winning value-over-growth trade has found a new level and turned into a daily battleground. Recently growth has taken a stand, but we think it is doomed. Basically, every time you see 40x EBITDA+ multiples, it’s just a question of how long you can stay solvent vs market irrationality. There are maybe five stocks every […]

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1:20 PM

Morning Sankey 3/26/21

My wife and I were sitting in the living room enjoying a bottle of wine. Out of the blue she said, “I love you. ” Surprised, I asked, “Is that you or the wine talking?” “It’s me,” she said, “talking to the wine.” What do you call a rich Centipede? A Dollarpede A mushroom walks into a bar and the bartender welcomes him. He’s a fun guy. A Freudian slip is where you say one […]

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9:05 AM

Morning Sankey 3/25/21

As of writing about the Suez Canal yesterday, we were very early to show how the bulbous nose of the giant ship was buried in the shoreline. That went viral, along with the shape the ship drew on satnav maps before entering the canal. The former, the buried nose of massively heavy vessel wedged in the sand, seems to be a major problem, and there was feedback on my comment that “two dudes in hi-viz […]

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8:59 AM

Morning Suez 3/24/21

Covering global oil markets, you can be sailing along peacefully and from nowhere, a new major event leaves you scrambling. And so a vast container ship blocks the Suez canal. Around 10% of world oil trade and 8% of world LNG trade move through the canal. Quite how the captain managed to hit the side of the canal and wedge the ship remains an open question, but we do know that the Suez is a […]

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8:38 AM

Sunday Sankey 3/21/21

Morning! Iran and China. Mr. Biden has his hands full with Putin asking for a live debate further to Biden being asked “is Putin a killer?”, that caused Russia to immediately withdraw its US ambassador. Big week for global geopolitics. There is no question that China is becoming ever-more diplomatically, geopolitically, aggressive on a sustained rising basis, and buying oil from Iran through smuggling is clearly at the top of the defiant self-interest list. Official […]

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12:36 PM
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