Geopolitical developments often have a major impact on oil prices since they can affect oil supply directly and since the threat of future supply disruptions can also build a risk premium into oil prices. As a notable example, in the early part of 2014, conflicts in Libya and Iraq led to temporary outages in their oil production, keeping world prices high, even as supply elsewhere in the world continued to ramp up. When production from those two countries came back on stream, that was an important trigger for the plunge in oil prices later in the year. Notice how much oil price spiked at the historical times of war.
The average price of crude sold by OPEC fell below $40 a barrel for the first time 2009, underscoring the financial cost of the group’s strategy to defend its market share.
The London market climbed despite the continuing fallout from the Paris terror attacks.
The FTSE 100 Index was 29.8 points up to 6148.1, buoyed by a robust mining performance.
UK and European markets had been knocked in the first hour of trading but recovered, with Germany’s DAX up 0.3% while France’s Cac 40 was flat.
Oil halted its decline near the lowest close in more than two months as investors weighed a global supply glut against heightened geopolitical tension after France bombed Syria in response to terrorist attacks in Paris.
Oil headed for a second weekly decline in New York, trading near its lowest level in two months, as US crude stockpiles rose three times more than forecast and the IEA said inventories in developed nations have reached a record.
The world crude oil price has been fluctuating around a low-level of $50/barrel for three months, now the prospect seems even gloomier as the International Energy Agency projects that 41% of the world market will continue to be taken by OPEC countries until 2020, with the rest of the world stagnating their production.
The safe money for oil traders is betting that Venezuela's plan to resurrect OPEC's old price band mechanism, attempting to set a $70 floor for the battered market, will be doomed from the start.
By Professor Alex Russell, Professor Peter Strachan
Sir Ian Wood’s analysis in 2012 that the North Sea industry was not viable when Brent crude was $114 a barrel and that drastic action had to be taken to save the industry is a sobering thought.
A global oil supply glut will persist through 2016 as demand growth slows from a five-year high and key OPEC producers maintain near-record output, the International Energy Agency said on Tuesday, even as low prices curb supply outside OPEC.
Supertankers hauling crude to China are contending with increased waiting times to unload as some on-land storage depots reach capacity amid an oil-buying binge by the world’s most populous nation.
Royal Dutch Shell Plc is “puling out all the stops to safeguard” its dividend in a world where oil prices remain “lower for longer,” chief executive officer Ben Van Beurden said.
Oil rebounded to trade near $45 a barrel as investors weighed shrinking US stockpiles against signs of lower demand for crude as refineries shut for maintenance.
Aberdeen hotels have been hit by an 18% decrease in prices since the collapse in oil prices started biting at the start of the year, new figures have shown.
The Hotel Price Index on room prices across the UK found that the Granite City was the hardest hit in the six months to June compared to the same period last year.
Aberdeen room rates fell to an average paid per night of £97 from £118. Dundee followed with a rates decrease of 8% to £83 from £90 per night last year.
Oil edged further above $46 a barrel on Tuesday, supported by the prospect of lower US inventories and production although concern about weaker Asian demand kept prices in check.
Offshore Europe provided “good bang for the buck” this year despite reports that attendance was down from the prior event when oil was booming in 2013.
Howard Johnson, co-founder and managing director of Blaze Manufacturing Solutions, admitted that business for the Laurencekirk-based firm would be down by third this year when compared to last year.
The firm, which specialises in oil and gas fire safety protection systems, was exhibiting on the Scottish Pavilion which is spearheaded by Scottish Enterprise.
Oil declined for a second day as Venezuela proposed an OPEC summit to stabilize prices amid a global glut.
Futures slid as much as 2 percent in New York. Producers from outside of the Organization of Petroleum Exporting Countries including Russia will be invited to the meeting, Venezuelan President Nicolas Maduro told state-owned broadcaster Telesur. Cutting output for a short-term price gain isn’t the cure for the “sickness” affecting global markets, Russian Energy Minister Alexander Novak said Friday.
Oil has fluctuated the past three weeks as concerns overs slowing demand in China fueled volatility in global markets. Prices are down more than 25 percent from this year’s closing peak in June on signs the surplus will persist. OPEC members are sustaining output and U.S. crude stockpiles remain almost 100 million barrels above the five-year seasonal average.
China may launch a global crude oil futures contract as early as October to compete with the existing London Brent and the US WTI benchmarks as it pushes ahead with reforms to open up its oil markets.
Europe's small and medium-sized oil companies have forward-sold more crude than in previous years, ramping up their defences against a scenario in which prices stay weak for longer than expected.
Hedging future oil output against market volatility is a well-rehearsed practice among smaller producers but as prices remain historically low, they have shielded themselves more heavily than usual from a further downturn.
Second-quarter results figures showed that oil companies, including North Sea operators Ithaca and Premier Oil, have increased their hedging positions compared with the previous year.
Iran's Oil Minister Bijan Zanganeh blamed the latest drop in oil prices on some members of OPEC and questioned whether any OPEC emergency meeting would reach an agreement, the oil ministry's news agency Shana reported.
"To balance the oil price... OPEC members should balance their production. An emergency meeting has been requested and we don't have a problem with that," Shana cited Zanganeh as saying.
Professor Paul de Leeuw, director of Robert Gordon University’s Oil and Gas Institute said the North Sea industry will endure a period of short term pain before it could emerge leaner, fitter and better able to compete as the oil price recovers in years to come.
