Breakingviews

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.

Market too bearish on European oil services

November 28, 2014

Petrofac has fared especially badly, falling 30 pct in a week. Sub-$75 oil is rattling explorers’ and producers’ nerves. As projects are shelved, oil service companies are being hurt. Share ratings reflect the pain and much depends on oil prices. But some stocks now look cheap.

Sub-$90 oil would quickly restore OPEC harmony

By Christopher Swann
November 29, 2011

Spats like the one at the oil cartel in June once often stemmed from the hugely different crude prices members needed to balance their books. Now, even Nigeria’s ultra-low $20 a barrel mark six years ago is up to $80. If prices fall anywhere near that level, OPEC will reunite.

OPEC desperately looking for a deal, any deal

December 14, 2011

Global oil markets are fragile, but it might not matter whether the cartel maintains or increases its output target when it meets later this week. Quotas are already ignored. After OPEC’s last acrimonious get together, simply reaching a consensus would soothe buyers and sellers.

Iraq rise will upset OPEC power balance

June 12, 2012

The war-torn country is already the cartel’s third biggest producer and has grand ambitions. But an unchecked increase would lead to durable oversupply and lower prices. OPEC has to find a way to keep Iraq in the cartel with a reasonable quota. Negotiations will be delicate.

OPEC can’t afford to give residents cheap oil

By Christopher Swann
June 14, 2012

It may sound like a cheap perk to appease the populace. But the practice costs OPEC members $120 bln in lost revenue, and encourages wasteful consumption. Both exporters and importers would ultimately benefit from lower subsidies. The politics are tricky, though.

OPEC starting to look like a cartel of one

By Christopher Swann
June 14, 2012

Twelve nations belong to the oil export club, but of late only Saudi Arabia has mattered. At the latest meeting, the kingdom again batted away Venezuela, Iran and others who wanted to cut output. The deepening divide in OPEC could face a more serious test if prices keep sliding.

Arab unrest will be a test for OPEC

February 23, 2011

Arab unrest will test the limits of the Organization of the Petroleum Exporting Countries. The oil cartel has enough spare capacity to cope with disruptions from Libya and elsewhere. However, the quality of crude differs, and supply could be squeezed if other member countries were to come under threat.

Middle East turmoil perpetuates OPEC charade

September 5, 2013

Increasing energy supply from North America might have caused a global glut. But a steady stream of crises - in Iran, Iraq and Libya - has restrained OPEC’s output, and spared the cartel the difficulty of enforcing strict quotas on its more unruly members.