Opec accepts hard reality 16 Mar 2009 The oil cartel says it didn t cut production quotes because it s worried about what high oil prices would do to the fragile economy. But it hasn t delivered on recent promised production cuts. Until Opec can keep its word, it makes sense not to overpromise.
Russian cash crisis offers China great oil deal 18 Feb 2009 China s $25bn oil purchase agreement with Russia trades cash for bargainpriced oil over 20 years. That solves a chunk of China s longterm oil supply problem. Russia may be unreliable, but the deal s advantages make it well worth the risk.
BP shouldn’t rush to name new chairman 11 Feb 2009 Paul Skinner was tipped for the top job at the UK oil producer, but the Rio Tinto chairman has tarnished his record with a big cash acquisition at the top of the market, and an ongoing fight over raising capital to pay for it. There s no rush to make a decision, so best to wait.
Oil at $45 is not cheap 10 Feb 2009 It s easy to lose perspective on the oil price given the $147 high it hit last year. But it traded below $35 for decades before the recent superspike. If producers think its current level is too cheap, that s because they have grown accustomed to high prices.
Exxon’s record $44bn profit makes tempting target 30 Jan 2009 During a financial crisis when the US government is strapped for cash, it s not hard to imagine windfall and other taxes springing into lawmakers' minds. But look again 2008 may have been great, but Exxon s business is in secular decline.
Kuwait blemished by Dow debacle 29 Dec 2008 The oil state's scrapping of a $17bn joint venture with the US chemicals giant may be financially justifiable. But it still reflects badly on Kuwait s business acumen: after renegotiating the terms only weeks ago, Kuwait now looks capricious and beset by political infighting.
Gold may glitter again in 2009 16 Dec 2008 Huge government deficits, low interest rates and rapidly growing money supply all add to the likelihood of renewed inflation and a rising gold price. Since there's much more hot money than in 1980, a gold bubble could push the price above 1980's peak of $2,430 in today's money.
OPEC membership not in Russia’s interest 12 Dec 2008 President Medvedev has hinted at joining the oil cartel, which is making fresh output cuts. But Russia s oil production is already stagnating. Participation in Opec might have only a limited effect in supporting prices. Worse, it would weaken Russia s complex ties with the West.
Petrobras is probably China’s best oil partner 10 Dec 2008 China's offer of $10bn to develop Brazil's offshore fields helps both China, which needs longterm oil supplies, and Petrobras, whose fields are marginal at low oil prices. The US shouldn't worry much: a Chinese deal with Brazil is less ominous than one with Venezuela.
Exxon profit could follow oil south 30 Oct 2008 The oil giant raked in a Q3 profit of $14.8bn. With oil peaking in July and staying above $100 a barrel for most of the quarter, it s no surprise Exxon once again broke its earnings record. But lower production and falling prices could make this trend hard to sustain.
Russian government scrambles to avoid bank run 16 Oct 2008 Stateowned entities had to take control of four of the countries banks in the last month, as depositors are beginning to withdraw funds, bringing back memories of the great scare of 1998. With oil down to $70abarrel and reserves shrinking, the Kremlin is caught in a bind.
Sacyr garage sale is in full swing 25 Sep 2008 The indebted Spanish company has slapped a for sale sign on several assets, including 20% of Repsol. But selling the holding won t be easy. Buyers look scarce, even if it could be a stepping stone to taking control of the Spanish oil company.
Opec membership is mostly for losers 11 Sep 2008 Brazil has declined to join the oil cartel. Production limits would hamper its output growth. Russia, though, wants to cooperate with Opec with declining production, it wants to maximise shortterm prices. Such decisions can seem politicallydriven, but reflect economics too.
Campaign against commodities speculators misses mark 10 Sep 2008 Some US lawmakers are taking aim at commodity prices by attempting to eliminate index speculation. Their case remains speculative at best. Investors sad experience of falling prices is already killing the bubble quite effectively.
$100 oil isn’t cheap 3 Sep 2008 Oil prices are sinking towards $100 a barrel. But robust global demand suggests the price may not decline much more. Even at $100, the black stuff is still 50% more expensive than in 2007 and still enriching oilproducing countries to the detriment of economic growth elsewhere.
ExxonMobil squeezes out a record profit 31 Jul 2008 It s hardly astounding with the oil price peaking above $140 a barrel in the second quarter. But if crude prices hold lower, the $11.7bn profit could be the oil giant s best results for some time and its falling production and rising costs could become a more obvious challenge.
US campaign against oil speculators needs refining 23 Jul 2008 Legislation that determines who can trade oil futures is gaining steam. But even the futures regulator says speculators aren t driving prices. Yes, the watchdog could use sharper teeth. But with oil well off its recent highs, the new law could do more harm than good.
US energy plans should embrace consumption cuts 15 Jul 2008 President Bush and oilman T. Boone Pickens want to tackle America's reliance on imported oil by trying to increase domestic supplies or substitute other energy sources. It may be politically tough, but they shouldn't forget the demand side of the equation.
Cnooc pays up for strategic growth 7 Jul 2008 The Chinese oil group s purchase of Norwegian oil services outfit Awilco Offshore looks pricey. But it fits with China s strategy of expanding its presence across the global oil market to lock up supplies. It also suggests Cnooc expects the oil market to remain tight.
Oil and commodity spikes are danger to US economy 3 Jul 2008 Their apparent costs may seem recoverable through loose monetary policy. But they make planning impossible, heightening the threat to companies like GM. Even ignoring the inflationary impact, commodity price spikes make Bernanke's low US interest rates counterproductive.