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Oil prices hit fresh four-year high above $82 – as it happened Oil prices hit fresh four-year high above $82 – as it happened
(2 months later)
The rise in crude oil prices above $82 a barrel has led to more predictions of $100 a barrel around the end of the year. A supply crunch is to blame, just as winter is coming – the US has reimposed sanctions on Iran and Opec declined to raise production at the weekend (some say the oil cartel has limited room for manoeuvre).The rise in crude oil prices above $82 a barrel has led to more predictions of $100 a barrel around the end of the year. A supply crunch is to blame, just as winter is coming – the US has reimposed sanctions on Iran and Opec declined to raise production at the weekend (some say the oil cartel has limited room for manoeuvre).
Energy shares such as BP have benefited, lifting European stock indices. Trade tensions have faded for now, after the latest round of US and Chinese tariffs took effect yesterday. But concerns clearly remain.Energy shares such as BP have benefited, lifting European stock indices. Trade tensions have faded for now, after the latest round of US and Chinese tariffs took effect yesterday. But concerns clearly remain.
The United States is putting “a knife to China’s neck” on trade issues, a senior Chinese official has said, as the two sides struggle to find a way to end a months-long standoff over trade.The United States is putting “a knife to China’s neck” on trade issues, a senior Chinese official has said, as the two sides struggle to find a way to end a months-long standoff over trade.
A day after both sides heaped fresh tariffs on each other’s goods, vice-commerce minister Wang Shouwen said the resumption of talks on the matter depended on the “will” of the US.A day after both sides heaped fresh tariffs on each other’s goods, vice-commerce minister Wang Shouwen said the resumption of talks on the matter depended on the “will” of the US.
Sterling has risen for a second day, staging a recovery after Friday’s sell-off. It is trading at $1.3158 at the moment, up 0.3%.Sterling has risen for a second day, staging a recovery after Friday’s sell-off. It is trading at $1.3158 at the moment, up 0.3%.
Thank you for all your great comments. Good-bye – we’ll be back tomorrow.Thank you for all your great comments. Good-bye – we’ll be back tomorrow.
As far as contingency planning for a no-deal Brexit is concerned, it couldn’t have come at a worse time for many retailers. Jessica Walker, partner at international law firm Mayer Brown, says:As far as contingency planning for a no-deal Brexit is concerned, it couldn’t have come at a worse time for many retailers. Jessica Walker, partner at international law firm Mayer Brown, says:
The need for retailers to commit additional spending to prepare for a no-deal Brexit, including the costs of setting up the necessary infrastructure to mitigate the associated risks, comes at a time when many retailers are needing to increase their investment in their stores and online offerings during a time of reduced consumer spending, difficulties in increases borrowing and an already-increased trading cost base including inflated business rates and rising employment costs.The need for retailers to commit additional spending to prepare for a no-deal Brexit, including the costs of setting up the necessary infrastructure to mitigate the associated risks, comes at a time when many retailers are needing to increase their investment in their stores and online offerings during a time of reduced consumer spending, difficulties in increases borrowing and an already-increased trading cost base including inflated business rates and rising employment costs.
There can be no doubt that preparing for Brexit as early as possible will be beneficial to all retailers but the costs of doing so may be unwelcome at best and crippling at worst.There can be no doubt that preparing for Brexit as early as possible will be beneficial to all retailers but the costs of doing so may be unwelcome at best and crippling at worst.
Germany’s BDI industry association has stressed the importance of achieving a breakthrough on getting a Brexit deal in the coming weeks to ensure a transition period that will give firms legal certainty until the end of 2020.Germany’s BDI industry association has stressed the importance of achieving a breakthrough on getting a Brexit deal in the coming weeks to ensure a transition period that will give firms legal certainty until the end of 2020.
BDI president Dieter Kempf said:BDI president Dieter Kempf said:
Even this amount of time will hardly suffice to negotiate a free trade agreement as the United Kingdom envisages.Even this amount of time will hardly suffice to negotiate a free trade agreement as the United Kingdom envisages.
His comments came as the industry body lowered its 2018 growth forecast for Germany and warned of a potential downturn, citing weaker demand for German exports due to US tariffs and Brexit, as well a threat to the economy from a wave of nationalism and xenophobia in Germany.His comments came as the industry body lowered its 2018 growth forecast for Germany and warned of a potential downturn, citing weaker demand for German exports due to US tariffs and Brexit, as well a threat to the economy from a wave of nationalism and xenophobia in Germany.
The German economy is now expected to grow by 2% this year, down from a previous estimate of 2.25%. Exports are forecast to rise by 3.5% in real terms, below an initial forecast of 5%.The German economy is now expected to grow by 2% this year, down from a previous estimate of 2.25%. Exports are forecast to rise by 3.5% in real terms, below an initial forecast of 5%.
Kempf said:Kempf said:
The trade policy of US President Trump, but also the approaching Brexit are dampening investment activity worldwide and with it German export business.The trade policy of US President Trump, but also the approaching Brexit are dampening investment activity worldwide and with it German export business.
The BDI president also warned that the German economy could be hurt by a wave of nationalism, after violent right-wing marches in the eastern city of Chemnitz that followed a stabbing blamed on migrants.The BDI president also warned that the German economy could be hurt by a wave of nationalism, after violent right-wing marches in the eastern city of Chemnitz that followed a stabbing blamed on migrants.
An allegedly homeland-loving nationalism that declares everything foreign an enemy is wrong. It poses a threat to the business model of our industry which is based on openness - and it’s jeopardising prosperity and employment.An allegedly homeland-loving nationalism that declares everything foreign an enemy is wrong. It poses a threat to the business model of our industry which is based on openness - and it’s jeopardising prosperity and employment.
Also in the fashion world, Michael Kors has confirmed its acquisition of the Italian fashion house Versace for $2.1 bn (£1.6bn).Also in the fashion world, Michael Kors has confirmed its acquisition of the Italian fashion house Versace for $2.1 bn (£1.6bn).
Donatella Versace, the brand’s artistic director and sister of founder Gianni Versace, will continue to lead the creative side of the business. Versace boss Jonathan Akeroyd will also stay put with the rest of the brand’s senior management.Donatella Versace, the brand’s artistic director and sister of founder Gianni Versace, will continue to lead the creative side of the business. Versace boss Jonathan Akeroyd will also stay put with the rest of the brand’s senior management.
Michael Kors will be renamed Capri Holdings. The enlarged company will comprise of three global fashion brands: Michael Kors, Versace and Jimmy Choo.Michael Kors will be renamed Capri Holdings. The enlarged company will comprise of three global fashion brands: Michael Kors, Versace and Jimmy Choo.
Donatella Versace, her brother Santo and daughter Allegra will become shareholders in Capri Holdings.Donatella Versace, her brother Santo and daughter Allegra will become shareholders in Capri Holdings.
Michael Kors buys Versace in $2.1bn deal
Here is our full story on the Next results, profit upgrade and Brexit plans.Here is our full story on the Next results, profit upgrade and Brexit plans.
Next warns over Brexit risks as it reports strong summer sales
The rise in oil prices over the past two days has prompted Mitsubishi UFJ Financial Group to lift its forecast.The rise in oil prices over the past two days has prompted Mitsubishi UFJ Financial Group to lift its forecast.
MUFG has joined others who are predicting prices might reach $100 a barrel in coming months – levels not seen since 2014 – with potentially adverse effects on global economic growth.MUFG has joined others who are predicting prices might reach $100 a barrel in coming months – levels not seen since 2014 – with potentially adverse effects on global economic growth.
Ehsan Khoman, head of MENA (Middle East and North Africa) research and strategy at MUFG, says:Ehsan Khoman, head of MENA (Middle East and North Africa) research and strategy at MUFG, says:
Winter is coming and markets need to brace for higher oil prices. Several factors have increased the likelihood of oil prices rising significantly, not least heightened geopolitical tensions. We see material near-term risks that oil could reach as high as USD100/b, potentially damaging global economic growth and increasing inflation.Winter is coming and markets need to brace for higher oil prices. Several factors have increased the likelihood of oil prices rising significantly, not least heightened geopolitical tensions. We see material near-term risks that oil could reach as high as USD100/b, potentially damaging global economic growth and increasing inflation.
Here is our full story on oil prices and what it means for the world economy.Here is our full story on oil prices and what it means for the world economy.
Rising oil prices fuel fears of damage to global economy
This is quite interesting. The European Medicines Agency, the European drug regulator, is moving from London to Amsterdam next year, but is having trouble getting out of its 25-year lease at 30 Churchill Place in Canary Wharf, where it occupies 10 floors.This is quite interesting. The European Medicines Agency, the European drug regulator, is moving from London to Amsterdam next year, but is having trouble getting out of its 25-year lease at 30 Churchill Place in Canary Wharf, where it occupies 10 floors.
From Reuters Breakingviews:From Reuters Breakingviews:
The European Medicines Agency is making a grim prognosis for London’s property market. The EU’s drug watchdog is using an arcane legal manoeuvre to try to get out of a lease on its UK headquarters. If successful, the case could set a dangerous precedent. Either way, London landlords should be worried...The European Medicines Agency is making a grim prognosis for London’s property market. The EU’s drug watchdog is using an arcane legal manoeuvre to try to get out of a lease on its UK headquarters. If successful, the case could set a dangerous precedent. Either way, London landlords should be worried...
The EMA is deploying a rarely used legal argument that dates back to the 19th century, known as “frustration”. That allows parties to cancel a contract if an unforeseen event renders it impossible to fulfill. In one case, a plaintiff used frustration to terminate a lease after the cancellation of Edward VII’s coronation. If the EMA is successful, other tenants may follow.The EMA is deploying a rarely used legal argument that dates back to the 19th century, known as “frustration”. That allows parties to cancel a contract if an unforeseen event renders it impossible to fulfill. In one case, a plaintiff used frustration to terminate a lease after the cancellation of Edward VII’s coronation. If the EMA is successful, other tenants may follow.
It looks like a long shot. Canary Wharf can argue that the existence of Article 50 in the Treaty of Lisbon, which was signed in 2007, shows that Brexit was not an unforeseen event. And UK politicians made the case for such a referendum long before the lease was first agreed in 2011. Nick Clegg, the former leader of the Liberal Democrats party, argued for a vote in 2008.It looks like a long shot. Canary Wharf can argue that the existence of Article 50 in the Treaty of Lisbon, which was signed in 2007, shows that Brexit was not an unforeseen event. And UK politicians made the case for such a referendum long before the lease was first agreed in 2011. Nick Clegg, the former leader of the Liberal Democrats party, argued for a vote in 2008.
The EMA has other options. Although the lease has no break clause, it does allow the drug regulator to sublet the space to other tenants. The EMA is exploring that option, according to one person familiar with the matter.The EMA has other options. Although the lease has no break clause, it does allow the drug regulator to sublet the space to other tenants. The EMA is exploring that option, according to one person familiar with the matter.
The snag is that Brexit means there is little demand for large office spaces. Banks are already moving staff out of London, with 75,000 workers likely to leave, according to consultancy Oliver Wyman. The fallout will be more severe if the UK can’t agree a deal with Europe: asset managers would also leave, and an economic downturn would hit demand for flexible office space. Providers like WeWork are now central London’s biggest office occupier. Analysts at Jefferies reckon rents in the City of London will fall by a fifth over the next two years. Small wonder that the EMA is getting creative.The snag is that Brexit means there is little demand for large office spaces. Banks are already moving staff out of London, with 75,000 workers likely to leave, according to consultancy Oliver Wyman. The fallout will be more severe if the UK can’t agree a deal with Europe: asset managers would also leave, and an economic downturn would hit demand for flexible office space. Providers like WeWork are now central London’s biggest office occupier. Analysts at Jefferies reckon rents in the City of London will fall by a fifth over the next two years. Small wonder that the EMA is getting creative.
Returning to the rise in Brent crude above $82 a barrel (up 1% on the day), Ashley Kelty, oil & gas research analyst at Cantor Fitzgerald Europe, believes that Opec will take its time before it takes any action.Returning to the rise in Brent crude above $82 a barrel (up 1% on the day), Ashley Kelty, oil & gas research analyst at Cantor Fitzgerald Europe, believes that Opec will take its time before it takes any action.
The US has become the world’s biggest producer, although it is reaching peak output as infrastructure constraints are beginning to bite. These two will mean that supply will remain relatively tight in the near term, although OPEC were always likely to prevaricate at this meeting, as they (Russia and Saudi) don’t wish to do anything that would appear to be appeasing the US, whilst being able to build market share at the expense of Iran.The US has become the world’s biggest producer, although it is reaching peak output as infrastructure constraints are beginning to bite. These two will mean that supply will remain relatively tight in the near term, although OPEC were always likely to prevaricate at this meeting, as they (Russia and Saudi) don’t wish to do anything that would appear to be appeasing the US, whilst being able to build market share at the expense of Iran.
The group also wants to wait and see how the Iran sanctions play out, and whether the US-Sino trade war escalates further, and thence begins to threaten the global economy. Furthermore, OPEC are thrilled at the current oil price as it helps refill the national coffers after the Saudi-instigated collapse several years ago. Ironically, Trump should also be somewhat pleased that the recent price rise has triggered the creation of a lot of jobs and helped the non-farm payroll figures get better.The group also wants to wait and see how the Iran sanctions play out, and whether the US-Sino trade war escalates further, and thence begins to threaten the global economy. Furthermore, OPEC are thrilled at the current oil price as it helps refill the national coffers after the Saudi-instigated collapse several years ago. Ironically, Trump should also be somewhat pleased that the recent price rise has triggered the creation of a lot of jobs and helped the non-farm payroll figures get better.
The lack of any concrete action by OPEC will increase focus on the rhetoric and actions by OPEC nations ahead of the next meeting in November. We reckon that OPEC are happy to sit back and see how the aforementioned sanctions and tariffs shale out before acting.The lack of any concrete action by OPEC will increase focus on the rhetoric and actions by OPEC nations ahead of the next meeting in November. We reckon that OPEC are happy to sit back and see how the aforementioned sanctions and tariffs shale out before acting.
Investors have brought forward their bets on the first interest rate hike from the European Central Bank since 2011. Money markets now assume that the ECB will raise interest rates next September – before the departure of the central bank’s president Mario Draghi. He finishes his term at the end of October 2019.Investors have brought forward their bets on the first interest rate hike from the European Central Bank since 2011. Money markets now assume that the ECB will raise interest rates next September – before the departure of the central bank’s president Mario Draghi. He finishes his term at the end of October 2019.
Draghi yesterday predicted a “relatively vigorous” pickup in underlying inflation, which has been interpreted by some traders and investors as a signal that rates could go up faster than expected. They had pencilled in a rate hike for the ECB’s October 2019 meeting, but have shifted this to the September meeting.Draghi yesterday predicted a “relatively vigorous” pickup in underlying inflation, which has been interpreted by some traders and investors as a signal that rates could go up faster than expected. They had pencilled in a rate hike for the ECB’s October 2019 meeting, but have shifted this to the September meeting.
Martin van Vliet, senior rates strategist at ING, told Reuters:Martin van Vliet, senior rates strategist at ING, told Reuters:
You can downplay what Draghi said yesterday, but I think it was a notable shift in rhetoric.You can downplay what Draghi said yesterday, but I think it was a notable shift in rhetoric.
If inflation unfolds as the ECB now forecasts, then it makes sense for markets to brace for the first rate hike before Draghi leaves.If inflation unfolds as the ECB now forecasts, then it makes sense for markets to brace for the first rate hike before Draghi leaves.
The ECB last raised rates in 2011 when Jean-Claude Trichet was president.The ECB last raised rates in 2011 when Jean-Claude Trichet was president.
Over in the US, the Federal Reserve is widely tipped to lift interest rates for the third time this year at the end of its meeting tomorrow, following strong economic figures.Over in the US, the Federal Reserve is widely tipped to lift interest rates for the third time this year at the end of its meeting tomorrow, following strong economic figures.
The government yesterday said that flights between the UK and the rest of the EU could be grounded if Britain crashes out of the bloc without a deal.The government yesterday said that flights between the UK and the rest of the EU could be grounded if Britain crashes out of the bloc without a deal.
In response, the global airline industry body Iata has issued a stark warning about the implications of a no-deal Brexit today, saying that the impact is far broader. Pilots’ licenses and security arrangements also need to be agreed.In response, the global airline industry body Iata has issued a stark warning about the implications of a no-deal Brexit today, saying that the impact is far broader. Pilots’ licenses and security arrangements also need to be agreed.
The association’s director general, Alexandre de Juniac, said in a statement:The association’s director general, Alexandre de Juniac, said in a statement:
The UK government’s papers on the air transport implications of a “no deal” departure from the EU clearly exposes the extreme seriousness of what is at stake and underscores the huge amount of work that would be required to maintain vital air links.The UK government’s papers on the air transport implications of a “no deal” departure from the EU clearly exposes the extreme seriousness of what is at stake and underscores the huge amount of work that would be required to maintain vital air links.
It is not just permission for flights to take off and land. Everything from pilots’ licenses to security arrangements need to be agreed. Much of this could be secured through mutual recognition of existing standards. But formalising this cannot happen overnight. And even when that is done, there will still be an administrative burden for the airlines and governments involved that will take time and significant resources.It is not just permission for flights to take off and land. Everything from pilots’ licenses to security arrangements need to be agreed. Much of this could be secured through mutual recognition of existing standards. But formalising this cannot happen overnight. And even when that is done, there will still be an administrative burden for the airlines and governments involved that will take time and significant resources.
While we still hope for a comprehensive EU-UK deal, an assumption that “it will be all right on the night” is far too risky to accept. Every contingency should be prepared for, and we call upon both the EU and the UK to be far more transparent with the state of the discussions.While we still hope for a comprehensive EU-UK deal, an assumption that “it will be all right on the night” is far too risky to accept. Every contingency should be prepared for, and we call upon both the EU and the UK to be far more transparent with the state of the discussions.
The pound is also higher for a second day amid growing hopes of a Brexit deal, continuing its recovery from Friday’s sell-off when the UK ran into an impasse in Brexit talks with EU leaders in Salzburg.The pound is also higher for a second day amid growing hopes of a Brexit deal, continuing its recovery from Friday’s sell-off when the UK ran into an impasse in Brexit talks with EU leaders in Salzburg.
Sterling is currently 0.26% higher against the dollar at $1.3154 and has gained 0.1% against the euro to 89.42p. On Friday, it fell to a low of $1.3053.Sterling is currently 0.26% higher against the dollar at $1.3154 and has gained 0.1% against the euro to 89.42p. On Friday, it fell to a low of $1.3053.
Brexit secretary Dominic Raab talked up the chances of an eventual deal yesterday, although he added that the government was also ready and prepared for a no-deal scenario.Brexit secretary Dominic Raab talked up the chances of an eventual deal yesterday, although he added that the government was also ready and prepared for a no-deal scenario.
However, some are sceptical that the pound’s recovery will last. Hedge funds have been building up a massive bet against sterling since April, when it traded above $1.42.However, some are sceptical that the pound’s recovery will last. Hedge funds have been building up a massive bet against sterling since April, when it traded above $1.42.
Hedge funds are betting big against sterling. And following last week’s Brexit debacle in Salzburg, that bet may now be nearing the largest on record.Commentary: Hedge funds, smelling Brexit blood, circle sterling https://t.co/isx0i3jTsZ pic.twitter.com/NMMz38DbHwHedge funds are betting big against sterling. And following last week’s Brexit debacle in Salzburg, that bet may now be nearing the largest on record.Commentary: Hedge funds, smelling Brexit blood, circle sterling https://t.co/isx0i3jTsZ pic.twitter.com/NMMz38DbHw
The high-street retailer Next revealed today that it had hedged against a further weakening of the pound until 2020. It said:The high-street retailer Next revealed today that it had hedged against a further weakening of the pound until 2020. It said:
In effect, we have insured the company against cost price volatility as a result of the potential devaluation of the pound. The corollary of this is that if the pound significantly strengthens next year we will not reap any of the reward until the following year.In effect, we have insured the company against cost price volatility as a result of the potential devaluation of the pound. The corollary of this is that if the pound significantly strengthens next year we will not reap any of the reward until the following year.
With Brent crude oil prices holding above $82 a barrel, the highest in four years, $100 a barrel has become the talk of the oil town.With Brent crude oil prices holding above $82 a barrel, the highest in four years, $100 a barrel has become the talk of the oil town.
Analysts at Petromatrix warn:Analysts at Petromatrix warn:
We are quite confident that at $100 a barrel Brent, global oil demand growth will be annihilated. $100 a barrel Brent looks fine on a chart but it looks problematic on a currency-adjusted chart, and disastrous on a domestic-price chart.We are quite confident that at $100 a barrel Brent, global oil demand growth will be annihilated. $100 a barrel Brent looks fine on a chart but it looks problematic on a currency-adjusted chart, and disastrous on a domestic-price chart.
Only the last one matters for oil demand and domestic prices include taxes that have risen over the last few years, while subsidies have fallen. On a domestic-price basis, $100 a barrel crude will not only force a sharp reduction of global oil demand, it will also lead to inflationary pressures that will force higher interest rates in Emerging Markets, which in turn could lead to wider pressure on economic growth. Many Emerging Markets will be forced to cut oil taxes or increase subsidies, resulting in turn in widening budget deficits.Only the last one matters for oil demand and domestic prices include taxes that have risen over the last few years, while subsidies have fallen. On a domestic-price basis, $100 a barrel crude will not only force a sharp reduction of global oil demand, it will also lead to inflationary pressures that will force higher interest rates in Emerging Markets, which in turn could lead to wider pressure on economic growth. Many Emerging Markets will be forced to cut oil taxes or increase subsidies, resulting in turn in widening budget deficits.
In developed economies, oil would make a come-back at $100 a barrel right at the time when the major auto manufacturers are introducing new lines of electric cars and that should result in an acceleration of the sales trend of Alternative Fuels Vehicles, on top of a price-induced contraction of oil demand.In developed economies, oil would make a come-back at $100 a barrel right at the time when the major auto manufacturers are introducing new lines of electric cars and that should result in an acceleration of the sales trend of Alternative Fuels Vehicles, on top of a price-induced contraction of oil demand.
The rise in oil prices has benefited shares in BP and Royal Dutch Shell and pushed Britain’s top share index higher. BP and Shell are among the main risers, up nearly 2% and 1.7% respectively.The rise in oil prices has benefited shares in BP and Royal Dutch Shell and pushed Britain’s top share index higher. BP and Shell are among the main risers, up nearly 2% and 1.7% respectively.
Top of the index is highstreet retailer Next, whose profit upgrade confounded expectations, at a time when other well-known retailers including John Lewis are struggling.Top of the index is highstreet retailer Next, whose profit upgrade confounded expectations, at a time when other well-known retailers including John Lewis are struggling.
Shares in Glencore are also higher, rising 2.9%, after the mining and trading giant launched an additional $1bn share buyback.Shares in Glencore are also higher, rising 2.9%, after the mining and trading giant launched an additional $1bn share buyback.
The FTSE 100 has edged up 0.2% to 7,475.92.The FTSE 100 has edged up 0.2% to 7,475.92.
Others say crude prices could rise above $100 a barrel as market uncertainties stack up –including sanctions on Iran, Venezuelan production concerns, tighter crude inventories and Saudi spare capacity.Others say crude prices could rise above $100 a barrel as market uncertainties stack up –including sanctions on Iran, Venezuelan production concerns, tighter crude inventories and Saudi spare capacity.
Oil traders gathered at the S&P Global Platts Asia Pacific Petroleum Conference in Singapore yesterday, where Daniel Jaeggi, president and co-founder of Mercuria Energy Trading, told the conference:Oil traders gathered at the S&P Global Platts Asia Pacific Petroleum Conference in Singapore yesterday, where Daniel Jaeggi, president and co-founder of Mercuria Energy Trading, told the conference:
I think we may well be on the verge of some very significant volatility here in Q4 2018 because, depending on the severity and the duration of the Iranian sanctions, the market simply does not have an adequate supply response for 2 million b/d of oil disappearing from the market.I think we may well be on the verge of some very significant volatility here in Q4 2018 because, depending on the severity and the duration of the Iranian sanctions, the market simply does not have an adequate supply response for 2 million b/d of oil disappearing from the market.
It is conceivable to see oil north of $100 a barrel.It is conceivable to see oil north of $100 a barrel.
The US sanctions on Iran threaten to cut Iran’s crude exports to as little as 1 million to 1.3 million barrels a day from over 2.5 million barrels a day, according to Trafigura.The US sanctions on Iran threaten to cut Iran’s crude exports to as little as 1 million to 1.3 million barrels a day from over 2.5 million barrels a day, according to Trafigura.
Ben Luckock, co-head of oil trading at Trafigura, said.Ben Luckock, co-head of oil trading at Trafigura, said.
I think it is entirely possible that once are beyond that we trade higher into Christmas and higher again into the New Year. I think it is entirely plausible that you are at $90 by Christmas and you are probably going to trade $100 in the New Year.I think it is entirely possible that once are beyond that we trade higher into Christmas and higher again into the New Year. I think it is entirely plausible that you are at $90 by Christmas and you are probably going to trade $100 in the New Year.
Barclays Capital also believes oil prices will go higher, without saying by how much.Barclays Capital also believes oil prices will go higher, without saying by how much.
Richard Robinson, manager of the Ashburton Global Energy Fund, says oil prices could surge another 12% to above $90 a barrel by the end of the year, due to tight supply, healthy demand, falling global inventories and anaemic spare capacity.Richard Robinson, manager of the Ashburton Global Energy Fund, says oil prices could surge another 12% to above $90 a barrel by the end of the year, due to tight supply, healthy demand, falling global inventories and anaemic spare capacity.
He notes that “without spare capacity, OPEC is relatively impotent in relation to preventing rising prices”.He notes that “without spare capacity, OPEC is relatively impotent in relation to preventing rising prices”.
Following four years of collapsing international capital spend, Trump’s removal of the world’s fifth largest oil producer, Iran, from the market – with sanctions to be fully implemented in November – was never going to end well.Following four years of collapsing international capital spend, Trump’s removal of the world’s fifth largest oil producer, Iran, from the market – with sanctions to be fully implemented in November – was never going to end well.
Iran is now likely to focus on influencing oil prices in the only way left available, by disrupting supply from others and elevating the risk premium – hence the military exercises performed over the Strait of Hormuz over the weekend.Iran is now likely to focus on influencing oil prices in the only way left available, by disrupting supply from others and elevating the risk premium – hence the military exercises performed over the Strait of Hormuz over the weekend.
Following Trump’s call for support from OPEC, the only country able to increase production significantly since July has been Libya. It increased production by 270k bbld, compared to Saudi Arabia’s decline of 140k bbld – and this could disappear in a heartbeat.Following Trump’s call for support from OPEC, the only country able to increase production significantly since July has been Libya. It increased production by 270k bbld, compared to Saudi Arabia’s decline of 140k bbld – and this could disappear in a heartbeat.
There is a risk that prices could spike even higher, Robinson reckons.There is a risk that prices could spike even higher, Robinson reckons.
In the event of a large supply disruption, both OPEC and the US – due to a lack of takeaway capacity in 2019 – will find it increasingly difficult to meet shortfalls next year. The world could then be faced with oil prices spiking back up to all-time highs circa $120.In the event of a large supply disruption, both OPEC and the US – due to a lack of takeaway capacity in 2019 – will find it increasingly difficult to meet shortfalls next year. The world could then be faced with oil prices spiking back up to all-time highs circa $120.
Brent crude has broken through $82 a barrel, rising as high as $82.20.Brent crude has broken through $82 a barrel, rising as high as $82.20.
Iran’s oil exports fell by more than 700,000 barrels a day between April and August, when the US reimposed sanctions on the country. The sanctions will be fully implemented in November.Iran’s oil exports fell by more than 700,000 barrels a day between April and August, when the US reimposed sanctions on the country. The sanctions will be fully implemented in November.