Breakingviews

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

By Edward Hadas
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.

New oil dynamics may challenge crude growth logic

April 19, 2013

Fears for the wobbly world economy have pushed Brent below $100 a barrel. Cheaper energy helps industry. Better still, booming shale output, greater efficiency and the rise of natural gas as a rival transport fuel may keep the oil price subdued even as growth is stimulated.

Saudi’s foreign aid bill piles up

May 28, 2012

Egypt, Jordan, Bahrain, Oman and Yemen: the Arab Spring has increased the kingdom’s spending to prevent unrest and boost influence. At the current oil price, the Saudis can easily afford to be generous, but today’s emergency gifts could become tomorrow’s permanent liabilities.

Euro zone powerless to avoid big oil divide

April 11, 2012

Some euro members are more unequal than others in the face of rising oil prices. The hit to growth is greater in enfeebled and touristy countries like Greece, Ireland or Italy than in richer ones like Germany. And there’s little governments can do to alleviate the pain.

Pricey exploration means dear oil is here to stay

March 28, 2012

Handouts to restive citizens during the Arab Spring pushed up the break-even oil price for Middle Eastern states. Oil producers face a similar problem. The fact that the cost of extracting oil has tripled over the decade for private explorers is bad news for gas guzzlers.

Saudi words won’t ease pressure on U.S. fuel prices

March 21, 2012

Despite its reassurances, Saudi Arabia has imperfect options to prevent U.S. fuel prices from reaching risky levels seven months before the presidential elections. Sanctions on Iran, meanwhile, allow Riyadh to benefit from both strong oil prices and high production.