The nonsense of releasing US Strategic Petroleum Reserves

Trump is on a mission to contain oil prices and has been sending strong tweets and messages blaming OPEC and supposed ally Saudi Arabia for the current levels of “high” oil prices. The Trump administration’s policies are in complete dissonance as tampering with the Iranian sanctions is a key cause of the tightening of global oil supply and strong noises around US energy independence is in complete opposition to Trump asking OPEC to pump more oil,...

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Saudi and Russia dominate gossip columns in run up to June OPEC meeting

As we approach the June OPEC meeting, all eyes on Saudi Arabia and Russia for any clues on the direction they will go on 22nd June. With the sanctions on Iran and imminent collapse of Venezuela, Trump has asked the two power weights to step in to avoid oil prices going any higher. This in itself is ironic as the US has been trying to wean itself off imports and attain energy independence from OPEC, yet it is now openly asking Saudi Arabia to...

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Oil price brave new world

Oil prices have never been easy to predict and despite the vast amount of data points out there, making sense of it all remains a big challenge. Two themes have emerged in the past decade that has changed the landscape and makes understanding the oil markets difficult: emergence of non-sophisticated traders and US exports. Non-sophisticated traders have replaced traditional traders. These new (and now established) entrants trade off newsflow...

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The oil market is recovering

Oil inventories have been worked down and beginning to return to historical normalised levels, driven by a mix of robust demand growth on the one hand and concerted efforts by OPEC plus friends to cap production on the other. While 12-18 months ago heightened geopolitical tensions and operational outages barely moved oil prices, such events are now needle moving news. The outage of Forties at the end of last year and intermittent headline grabbing...

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Oil price contingent payment: Bridging the valuation gap in an uncertain oil price environment

In the current oil price environment, buyer-seller alignment on valuation is likely to be an issue with differences driven by view on the oil price outlook. A number of transactions have stalled or been pulled over the last year. One possible way to bridge this gap is to have a contingent consideration element that is contingent on the recovery of the oil price; the seller benefits from recovery in the oil price if it believes a recovery is...

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