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02 May 2015

Press review 02-05-2015 - Still under the waterline

The Brent index is still holding well to its rally, closing the week near 66 $/b. The WTI index, used to price petroleum extracted in the US, is in contrast under 56 $/b, a difference of almost 20%. The price rally is not really happening across the Atlantic, leaving the American industry without relief for now.

Geo-political developments continue to dominate the economic outlook for the years to come, with competing powers continuously challenging the dominant role NATO acquired after the fall of the USSR. There are many points of tension around the globe, which could not possibly be entirely covered in this review. But by focusing on energy flows, it is clear other actors now have a say in the plot of this show.

29 April 2015

Footing the bill in Lybia

Muammar Gadaffi visited Europe for the last time in August of 2010, received in Rome with all the honours of a chief-of-state. At the time he requested five thousand million euros from the European Union to help the fight against illegal immigration. His words were peremptory: "Tomorrow Europe might no longer be European, and even black, as there are millions who want to come in".

One year later Gadaffi would be summarily executed at the hands of an Islamic militia.

25 April 2015

Press review 25-04-2015 - Contrasting trends

This was a busy week with multiple developments of interest in energy markets and international politics. Libya is back to front pages, and again for the wrong reasons. However, both the media and politicians remain reluctant in admitting the role of the 2011 European/NATO bombings on the current refugee crisis. The way Italy is being left on its own to deal with the crisis is also quite revealing of the impasse the European Union is in today.

The Brent index extended the current rally, closing the week above 65 $/b, the highest price in over four months. Nevertheless, this price is yet far from bringing solace to the western petroleum industry, that proceeds its haemorrhage of capital and jobs. One of the reasons is the gentle and mooted return of Iran to the international petroleum market, bringing on stream reserves of high EROEI with which international companies can no longer compete.

18 April 2015

Press review 18-04-2015 - Inversion?

It is not uncommon in commodities markets for an unanimous view to signal a turning point. With the resource optimist media reviewing their outlooks for infinite growth, something was clearly about to change. It just took a few days from the moment the Forbes group declared the "shale boom" dead to a new run up in petroleum prices. Wednesday alone the Brent index climbed nearly 7%, closing the week well above 60 $/b, the highest price since early December.

It will certainly not be this price yet to invert the contraction of the petroleum industry and halt the wave of job losses. But this week trading shows that in first place the price bottom of early January is likely done and secondly that volatility has not gone away.

Soon the media will start guessing where will the petroleum price settle. It will be a pointless discussion, the drivers behind the volatility that brought the price here have not changed.

11 April 2015

Press review 11-04-2015 - Air quality: a driving force

This was a relatively quiet week in the petroleum market, with neither the agreement over Iran's Nuclear programme, nor the raging wars between Sunni and Shiites causing unexpected movements. There is still some volatility but its magnitude is winding down. For the past four weeks the Brent index seems to have settled in the high 50s $/b.

During the largest part of the week a strong polar high parked over north-west Europe before resuming its journey southwards; in many places these were the first real days of Spring. The high pressure imposed by this huge mass of cold air stalled air circulation at the surface and pollution accumulated. By Friday, particulate mater concentrations where prompting public health warnings throughout, with an especial political spin in France, where for the second time this year, restrictions to automotive circulation had to be imposed.

04 April 2015

Press review 04-04-2015 - Agreement or disagreement?

Image by Wikipaedia
When did the Nuclear Iran story start? It was so long ago that is hard to remember exactly. Consulting the Wikipaedia, the first round of sanctions was introduced in 2006, gradually expanding up to an economic-wide embargo set in 2010. If all goes well the stand off will come to a close next June with Iran largely de-scaling its Nucelar programme. The Islamic Republic is set to become a full-right petroleum exporter once again.

These news not only mean some degree of breathing space to the international market (with a particular impact in Asia). For Iran itself means it can now properly care for its ageing petroleum resources, properly managing their inevitable decline.

But is it all good? Considering the reactions from other regional powers that might not be exactly the case.

28 March 2015

Press review 28-03-2015 - Towards a great war

Image by Huffigton Post
The Middle Eastern chessboard became far denser this week with one more regional Shiite-Sunni conflict intervened from aboard. As Saudi Arabia bombed Shiite positions in Yemen's capital Sanaa, the US was helping the Shiite siege to Iraq's petroleum city Tikrit, bombing the Sunni therein. Compelled to report both events, the mainstream media was able to vent some difficult questions: are not the US and Saudi allies? Why were rebellions in Syria or Libya supported by NATO and not those in Bahrain and Yemen? And what of the European foreign policy? Missing in action?

The support NATO provided to the Sunni against the Shiite governments in Syria and Iraq has unleashed a watershed of events that is slowly igniting the whole region. Old rifts are revived, new are open, Sunni and Shiites seem now unable to cohabit peacefully. Under their feet lie the fields that provide more than one third of the petroleum consumed in the world. With Iran and Saudi Arabia on opposite shores, the Persian Gulf could be the stage for the most damaging of wars.