Good morning; here's what the Oilman has for you today:

• U.S. Oil Exports Set to Surge after Saudi Cuts

• The Great Heat Pump Gamble

• Tweet of the Day

U.S. Oil Exports Set to Surge after Saudi Cuts

The U.S. oil industry has been in a head-to-head competition with OPEC since the start of the shale revolution.

Now, Saudi Arabia has served an unexpected gift to U.S. drillers: more foreign markets.

Keep the oil coming

The kingdom said Monday it will slash its oil production by another 1 million barrels daily.

A day later, Bloomberg reported that Asian refiners were already looking for alternative oil supplies.

For now, they are turning to African and Russian crude, but analysts say U.S. oil exporters will also benefit from the Saudi move.

How desperate do you have to be to kill your own market share to push prices higher?

Pretty desperate, I’d say.

Desperate enough to hand part of this market share to your biggest rival.

Good news for producers, bad news for Biden

The United States is already exporting about a third of the oil it produces.

With the latest Saudi move, these exports will rise further.

And there will be less oil left to refill the seriously depleted SPR.

This supply situation will effectively put a floor under oil prices.

There goes the plan to start refilling this year.

We’ll probably soon start hearing calls for more output and maybe threats. Again.

Because they worked so well last time…

All in all, however, it’s good news for the industry at a time when nobody knows if we’re heading towards a recession.

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The Great Heat Pump Gamble

The IRA has earmarked $250 million for local heat pump production as part of the transition push.

Yet, if Europe is any indication, that particular part of the push may be doomed before it even starts.

Not enough pumps. Not enough people.

So, get this: the EU wants to install about 60 million pumps at houses and apartment buildings by 2050.

Obviously, this means that production will have to grow immensely.

And the number of people to install all those pumps will need to grow, too.

Currently, production is nowhere near these massive targets.

The same goes for heat pump installers.

There’s a shortage of half a million of those, based on the targets.

So, what does the EU do?

It’s trying to draw more women into heat pump installation.

But the kicker?

People don’t want heat pumps.

There are too many negative reports about the things, and people are reluctant to spend thousands on one.

Demand, as they say, is sluggish.

But sure, go on and train half a million people to install heat pumps.

Coming to a town near you

Like the EU, the Biden administration is big on heat pumps.

Do we have the skilled workers needed to install a lot of them?

Nope. Not yet.

Not only this, we don’t even have much heat pump production capacity, so it’s mostly imports.

How about that for jumping before you see where you’ll land?

On the flip side, we can watch the EU and learn what not to do before we actually jump.

Around the Global Patch

🇸🇦 Saudi Arabia's failed bid to boost oil prices.
🇨🇳 China's oil demand: a potential disappointment in 2023.
🇷🇺 Russia nears approval for new gas pipeline to China.

Tweet of the Day

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