Oil flirting with the $20s gives OPEC cause to cut

January 12, 2016

That bleak outlook for oil is gaining traction among analysts. Such bearish predictions may prove correct unless bickering OPEC puts aside its differences and agrees to deep cuts. But for that to happen, Russia and other producers outside the cartel will have to play ball.

Russia has levers to cope with oil squeeze

September 3, 2015

A low oil price will dent growth and public revenues, and Russia needs rebalancing. Yet President Vladimir Putin can hold the line by drawing on reserves and even inflating regional deficits, while the rouble’s fall helps competitiveness. That could enable a fragile equilibrium.

Why $65 per barrel oil looks like a ceiling, not a floor

June 1, 2015

Most industry observers expect a slow climb from the current levels. But global supply is rising, as U.S. shale drillers cut costs fast and Saudi Arabia and others go for volume. With non-U.S. shale on the horizon, $65 a barrel for Brent looks more like a ceiling than a floor.

BP and Total find downstream respite

April 28, 2015

Strong results in refining and marketing limited the profit fall at the two European majors. With the oil price down, the gains are especially welcome. But downstream overcapacity will bite in the medium term, while upstream businesses remain hostage to the oil market.

Oil price floor could be a long way down

January 13, 2015

Petro-economics are painfully simple for producers. Lower prices hardly push up demand. And it will take a price below $30 a barrel before supply falls enough to balance the market. Unless producers can regroup into an effective cartel, their suffering will continue.

Cheaper oil no friend to Asia’s households

December 24, 2014

Real wages are growing 2 percentage points below their long-term average, reflecting labour’s weak bargaining power amidst slowing growth. Falling oil prices and low inflation could prompt employers to be even more tight-fisted in 2015. Household finances might wobble.

Rouble free fall throws Russia into ugly spiral

December 16, 2014

The Russian currency kept falling after the central bank hiked its key rate from 10.5 pct to 17 pct, leaving policymakers with few sensible short-term options. Further out, only higher oil prices and an end to the Ukrainian stand-off can soothe markets. That’s unlikely to happen soon.

Sinking rouble puts debt squeeze on Russia Inc

December 3, 2014

Most of Russia’s external debt is owed by the country’s banks and corporates. About $138 bln comes due in the next eighteen months. With the currency down 40 percent against the dollar this year, that will put a major strain on enterprises’ cashflows. Expect the state to step in.

Iran sanctions’ impact could prove slippery

January 9, 2012

Iran’s nuclear ambitions are a problem, but more sanctions may not be a solution, especially if China doesn’t cooperate. Iran will suffer, but may just become more determined. Without a realistic plan for unwinding sanctions if they fail, they will just distort oil markets.

Higher oil price should burn itself out

February 21, 2012

Robust demand – created by a reviving U.S. economy, loose money and vigorous Asian buying – is pushing Brent above $120 a barrel. Supply fears may keep trading volatile. But absent a serious dust-up with Iran, higher prices should be mostly self-correcting.