Wednesday 17 October 2018

Turkey, Saudi, $200 Oil ... Brex and the City

As the Saudis threaten to lash out crazily at, errrr, everyone, and talk of $200 oil is in the air (Putin tried talking that one up a decade ago), it does at least look as though the price will remain firm for a while to come.  Venezuela and Iran aren't going to be contributing much to a downside scenario for a while at any rate.

What's this to do with Brexit?  A couple of things.  The less interesting one (to me) is that the German car industry is already anxious enough, and it can't hurt the negotiations to have them putting a bit more pressure on Merkel/Barnier to offset their $100+ oil concerns.

More interesting is what happens in the oil & gas investment / M&A sectors.  Returns on this sector have not been so great for a while, and equity investors looking for big profits have gone elsewhere.  There has been a steady deal flow, both debt and equity: but without doubt there's scope for a whole lot more: and $100 oil will bring forth a heap of renewed interest.

Here's the thing:  most of this action goes to the City of London - and that ain't gonna change any time soon.  No amount of PR in Paris and Frankfurt is going to undermine London's gigantic advantages in these matters.  And nor will Brexit, IMHO.  To the contrary: it may even free up the City - there are currently at least some Brussels constraints on finance - to be even more flexible and creative than it is already.  As in most regulatory matters, be that finance or energy, British regulators are a great deal more nimble and responsive than any others.  

Now: personally I'm a consumer and $100 oil is not a great prospect per se.  But it'll hurt more in Europe: and I don't see the City complaining.  Why, even the dour Scotties may raise a smile ...

ND

8 comments:

Nick Drew said...

... and before SL says it: if you want to view this as a contra-indicator, be my guest!

david morris said...

"To the contrary: it may even free up the City - there are currently at least some Brussels constraints on finance - to be even more flexible and creative than it is already"

Jeez


Just what we need, flexible & creative financing wheezes from the same people that brought you 2008

Anonymous said...

And don't forget the tax take for HMG. Plus all that raging inflation does wonders for debt.

There is a 70's feel about this. What's there not to like.

CityUnslicker said...

possibly RBD.L worth a look.. far be it from me to make more recommendations mind with my record!

Steven_L said...

and before SL says it: if you want to view this as a contra-indicator, be my guest!

SL's little 'earlier retirement' SIPP is still long Hurricane Energy and Enquest and even took up full rights in the latter, it intends to stay put until early 2020's.

It ignored CU's advice to get out of India and Vietnam and intends to stay invested in these places 'til post 2035 too.

On the 'special situations' bargain hunting front Pandora (the Danish jewellery seller not the US music streamer) is the obvious one atm and it's taken another long position in Hostelworld.

I'm more concerned about you're going to blog with no fingers if you keep insulting our crazy friends than $200 oil.

Anonymous said...

The first thing May should have done was had a free trade deal with New Zealand, Australia, US etc on alcholic drinks which would come in day 1 after Brexit. She then said have told the EU about 18 months ago, that we would start advising supermarkets that tariffs might come in on EU wine after Brexit and that they should consider changing their purchasing ASAP. That would have made it a lot better.

James Higham said...

“And nor will Brexit, IMHO. To the contrary: it may even free up the City”

Indeed.

Electro-Kevin said...

https://www.youtube.com/watch?v=cWk5fwhul0c

I have seen the light. The error of my ways.

Bletch !