Charlie Maxwell And An Ex-Admiral Sail Into Caspian Sea

The Olympics are drawing bigger ratings than Putin’s war, but in the sake of due diligence I thought we should check in on the situation before heading to the beach.

Eric Bolling sat down with Weeden & Co’s Charlie Maxwell yesterday on Fox Business Network’s Happy Hour yesterday; if you are trading oil listen up, although Charlie seems somewhat non-plussed over it all:

“I think it’s got some dangers but the actual amount of oil that goes through Georgia today is not so much that it would cause prices to rise very much. The main problem is that if the war spread to some of the other areas, Azerbaijan and that area, that would be really serious…They don’t have any direct struggle going on with Azerbaijan at the moment. That may be fabricated in the next 48 hours

On the risk of oil being cut-off:

“The truth of the matter is, we have always had a lot of cushion between us and the possibility of cut-offs – extra production that we were ready to bring on stream around the world. Today we have zero. Zero extra production ready to go in case something is cut off. So, if there is an emergency in the Caspian area, the oil is cut off, we’ll feel it immediately.”

On the real number for world demand and world production:

“It’s about even. The reason that people say there’s two million barrels a day is that the Saudis have two million barrels of oil a day they’re ready to sell us. Anyone wants it, they can have it and it’s unusable. It’s heavy black stuff no refinery can handle. So they’re offering it to us and we have it and it’s right out there in front of us but we can’t use it.”

On Russia not increasing oil production:

“The general Russian situation is very serious because they’re not increasing their production nearly as fast as they have for the last five years. And the result is that we can’t buy it from them if they can’t produce it.  They say they can’t produce it.”

On supply vs. demand in the energy sector in general:

“There is not very much money being spent relative to the demand that we see out there. Supply and demand are equal today. Looking out two years, demand looks like it will pull ahead. And you have to spend the money six years in advance of wanting the oil. So the money hasn’t been spent in ’04, ’05, ’06 and ’07 and ’08. We’re not going to be able to take advantage of those new sources very much in the next three or four years.”

On China drilling in Cuba or Venezuela:

“Unfortunately, the Cubans are hitting some good oil north of Havana and we’re going to see a lot of oil development over on that side. So far it’s been all Latino stuff. So I hope they can continue. Canadians are down there helping a lot. I’d rather see the Canadians there than the Chinese or Russians.”

Ultimately Charlie thinks oil is heading lower…

“What will happen is we’ll go down to about 90, 80, 100. We’ll play around for a while as long as the recession is going on, soo long as we have the Saudis producing a little bit more and they are producing a little bit more, thank you very much, Saudi Arabia. And so long as these high prices are scaring people.  But you know after two or three years people get used to them. People adjust. Recession is over.”
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