Reuters blog archive
from Global Investing:
Truly, oil can be a curse. Having it may enrich a country (more likely its rulers) but it does not seem condusive to democracy. And the more oil a country produces, the less likely it is to make the transition to democracy, according to research from investment bank Renaisssance Capital.
So as Iran goes to the polls today, what are the chances it will become a democracy? (Iran itself could argue, reasonably enough, that it is the most democratic country in the region -- everyone over the age of 18, including women, are allowed to vote, though the choice of candidates is restricted)
Surprisingly, the Renaissance report's author Charles Robertson concludes, Iran does have a chance to achieve democracy, though probably not this year. He says no oil exporting country that produces more than 150,000 barrels per day of oil per million of population has ever achieved a transition to democracy (note Norway was already a democracy before it found oil). But others which produce less oil have done so, notably Algeria, Gabon, Congo Indonesia, Nigeria and Ecuador (Some of these democracies are clearly flawed). Robertson writes:
This suggests that the Gulf states, Equatorial Guinea, and Brunei willl not change their political systems until their energy wealth dries up. ..Yet Iran's net exports are 32,000 bpd per million people. This is insufficient to immunise it from democratisation pressures.
It’s easy to blame tensions with Iran for all of the recent spike in petroleum prices. But there are other catalysts for the market’s sudden surge. For one thing, U.S. economic data have been consistently surprising to the upside while the European situation appears loosely under control, both factors that suggest the global economy may yet coast along through 2012 without faltering.
Then there are the actual hits to supply taken due to geopolitical events around the world, says Marc Chandler at Brown Brothers Harriman, which in just two months have helped push Brent crude prices more than $20 higher to a 10-month high above $125 a barrel:
from Global Investing:
Nothing like an oil price spike to bring out the differences between the haves and have-nots of this world. The ones who have oil and those who don't.
With oil at $124 a barrel, the stock markets of big oil importers India and South Korea posted their first weekly loss of 2012 on Friday. But in Russia, where energy stocks make up 60 percent of the index, shares had their best day since November, rising more than 4 percent. The rouble's exchange rate with the dollar jumped 1.5 percent but the lira in neighbouring Turkey (an oil importer) fell.
from Global Investing:
Where are the missing barrels of oil, asks Barclays Capital.
Oil inventories in the United States rose sharply last week, with demand for oil products such as gasoline at the lowest in 15 years and crude stockpiles at the highest since last September. Americans, pinched in the wallet, are clearly cutting back on fuel use.
But worldwide, the inventories picture is different -- Barclays calculates in fact that oil stocks are around 50 million barrels below the seasonal average. And sustainable spare capacity in the market is less than 2 million barrels per day. What that means is that the world has "extremely limited buffers to absorb any one of the series of potential geopolitical mishaps." (Barclays writes)
from The Great Debate UK:
By Kathleen Brooks. The opinions expressed are her own.
As the nuclear threat in Japan steps up a gear, global politicians have pre-empted a wave of anti-atomic feeling from their public and spoken out against nuclear reactors, which threatens its future as a viable alternative to oil.
As Japan has found out with devastating consequences when things go wrong with atomic energy the effect is both devastating and immediate. Unlike carbon fuels, which have a lagged detrimental effect on the atmosphere, a nuclear accident doesn’t get worse in increments – once radioactive material is released into the atmosphere the damage to the surrounding areas is done.
from The Great Debate:
Bullishness about the short-term prospects for crude is evaporating among banks and hedge funds, as the market fails to sustain rallies above $80 and girds for widespread refinery shutdowns to work off bulging gasoline stocks.
The urge to buy on the dips, trade the range and hope for a breakout seems to be fading. Banks and other swap dealers boosted their net long position in WTI-linked futures and options by a meagre 7,000 contracts to just 22,000 in the week to Aug. 17, even as prices tumbled from over $80 to around $75.
from Environment Forum:
The giant Gulf of Mexico oil spill is breaching some of the apparently threadbare defenses that are being used contain it.
The National Wildlife Federation took a group of journalists on Thursday on a tour of some of the affected south Louisiana wetlands. Scientists on the tour took samples of oil that have washed into wild cane fields that tower more than 10 feet above the water.
from Global News Journal:
Singapore's warning of a terrorist threat in the Malacca Straits has again highighted the issue of who is in charge of security in one of the world's busiest shipping lanes.
Singapore, Malaysia and Indonesia have stepped up sea patrols in the strait after Singapore's navy said on Thursday it had received indications a terrorist group was planning attacks on oil tankers.
from Environment Forum:
Hundreds of companies and laboratories are racing to find an economical way to make "green crude" from algae. The biofuel industry is grappling with a series of hurdles, which players readily recognized at a summit this week in San Diego and we cover in this story.
One question asked by one of the sector's early leaders is will biofuel from algae look like Big Oil or Big Agriculture.
from Commodity Corner:
The Muslim holy month of Ramadan has disrupted one of the wackier tasks for OPEC reporters: running around Vienna's beautiful inner ring road with Saudi Arabia's Oil Minister Ali al-Naimi, who likes to keep himself and the press corp fit. He often uses the 45 minute walk-cum-jog to give media a background briefing of his view on the oil market as he and the bizarre group of security, aides and reporters trot past the city's stunning palaces and bemused Viennese on their way to work (or home from a night's revelling). (Photo: al-Naimi with journalists in Cairo, 28 Nov 2008/Amr Dalsh)
The daylight fast for Muslim delegates and ministers means that most meetings are taking place late at night, making an early morning run less practical. Naimi ran on Tuesday afternoon, accompanied only by security. He didn't go at all on Wednesday morning, much to the chagrin of the reporters on the early shift. The run is sometimes the only chance for media to get Naimi's insight. It is a blessing and a curse for reporters on the beat, who have to be up at the crack of dawn to take part but are often rewarded with the biggest oil story of the day. Maybe Naimi figures this time there's no need for a background briefing. With the oil price where it is, he seems relaxed enough to put it all on the record.