Thursday, 2 April 2015

$20 Oil? Quite a Prospect

Agreement in Lausanne to restore Iran back into the international community could easily trigger a further sell down towards levels around $20 per barrel. Ahead of the talks, Iran’s oil minister Bijan Namdar Zangeneh said that the country could easily increase production by 1m barrels per day within months of sanctions being lifted.
So reports the Telegraph.   $20 is quite a prospect if it were to last more than a week or two.  Of course, that's what sometimes happens with really extreme market movements, we need only recall the twin, fleeting peaks of $40 (1990 when Saddam invaded Kuwait) and $147 of more recent memory.  The precise price involved in such events never really makes any economic impact, whatever its effect on the headlines.

Can $20 be seriously countenanced?  The commodity traders' slogan runs: if in doubt, go short - because there is always more of the stuff (any stuff) out there than the conventional wisdom ever imagines: and to Hell with Malthus and the peak-oilers.  There is certainly plenty of oil in the Middle East with marginal production cost even lower still.  

But if $50 is embarrassing to Putin and many others besides, well ...  It seems longer ago than 2008 that he was mentioning $200 as the next port of call.  Isn't it interesting that Mr Zangeneh should lob this new scenario into the proceedings?  My understanding is that the Russians are quite important actors in the current goings-on.  Perhaps he knows that they know that it's just a come-on to the oil consumers around the table.  Then again, the USA is set to become an exporter ...   

Anyhow, the Iranians will no doubt chuckle at the thought of how $20 sounds on the other side of the Gulf.  What mischief.  I can't see the Saudis calling off ops in Yemen any time soon.



Blue Eyes said...

Let's hope so, although it probably would mean that George would be forced to revisit the fuel duty "stabiliser"...

Anonymous said...

Blue eyes - or maybe by the time it happens it'll be the testicle Ed with his hands on the stabiliser....

CityUnslicker said...

Saudi Oil is $12 dollar to extract, doubt they care too much.

China will be rather chuffed too.

Nick Drew said...

but i think they used to enjoy spending the balance between 12 and 120 - ?

Budgie said...

I am (unfortunately) old enough to remember (one of) the previous doomsters saying that oil would run out by 2000. Where did they go? Oh, yes .... they now say we're doomed because CO2 climate sensitivity is 6degC (or more, invent your own). Plus ca change.

Anonymous said...

As someone has already pointed out, what chance of a chancellor [does it matter who?] dropping fuel levies?

They always lie about getting the economy back in shape [Lavs or Cons] and then slap on extra fuel duties.
Needless to say, if effects the "pound in your pocket" - as commodities drop in price but the process is so slow here in Britain because between the politicians, Brussels and the corporate axis - we are stuffed on this island, not only do we have to cough up for the EU tariff barrier, as we pay a carbon floor price, extra duties, and a myriad of other sneaky taxes - everything is more expensive.
While the corporate blob has a blinder, a holiday where profits are running away as they capitalize by not passing on the benefits of oil price decreases.

Thus in Britain the consumer is fucked all the way round.

To change it we would require, want small government and free market competition ha, ha,ha, ha - what a joke country this is. For, in Britain there is zero chance of the above, we are done up like kippers and strangely enough: only kippers could provide relief and a journey out of the sea of political statism, oligarchy and cartels' economic price control, dictation.

Blue Eyes said...

Hmm actually I was suggesting a rise in the fuel tax, to compensate the Treasury for the reduction in VAT and other taxes which fall when the oil price does.

Or maybe we will have another go at road-pricing.

Eman sherkawy said...

اهم شركات كشف تسربات المياه بالدمام كذلك معرض اهم شركة مكافحة حشرات بالدمام والخبر والجبيل والخبر والاحساء والقطيف كذكل شركة تنظيف خزانات بجدة وتنظيف بجدة ومكافحة الحشرات بالخبر وكشف تسربات المياه بالجبيل والقطيف والخبر والدمام
شركة تنظيف خزانات بجدة
شركة مكافحة حشرات بالدمام
شركة كشف تسربات المياه بالدمام

Eman sherkawy said...

اهم شركات نقل العفش والاثاث بالدمام والخبر والجبيل اولقطيف والاحساء والرياض وجدة ومكة المدينة المنورة والخرج والطائف وخميس مشيط وبجدة افضل شركة نقل عفش بجدة نعرضها مجموعة الفا لنقل العفش بمكة والخرج والقصيم والطائف وتبوك وخميس مشيط ونجران وجيزان وبريدة والمدينة المنورة وينبع افضل شركات نقل الاثاث بالجبيل والطائف وخميس مشيط وبريدة وعنيزو وابها ونجران المدينة وينبع تبوك والقصيم الخرج حفر الباطن والظهران
شركة نقل عفش بالرياض
شركة نقل عفش بالطائف
شركة نقل عفش بالدمام
شركة نقل عفش بجدة
شركة نقل عفش بمكة
شركة نقل عفش بالمدينة المنورة
شركة نقل عفش بينبع
شركة نقل عفش بالخرج
شركة نقل عفش بالقصيم

Eman sherkawy said...

شركة نقل عفش بخميس مشيط
شركة نقل عفش بتبوك
شركة نقل عفش بابها
شركة نقل عفش ببريدة
شركة نقل عفش بنجران
شركة نقل عفش بحائل
شركة نقل عفش بالظهران
شركة نقل عفش واثاث
شركة نقل عفش