The pledge to cap retail energy prices in UK prime minister Theresa May’s ill-starred 2017 election campaign was a distinct departure from Conservative Party economic orthodoxy. Intended to appeal to the working class heartlands of the opposition Labour Party, it was at the centre of a manifesto widely decried by the business community as the Tories’ most “anti-business” ever.
Presenting BP’s Statistical Review of 2016 today, chief executive Bob Dudley said: “The oil market returned broadly back into balance by mid-year, but prices continued to be depressed by the large overhang of built-up inventories.”
Dudley’s definition of balance here is a straightforward matching of production and demand. Opec and its partners in output cuts prefer to factor in the inventories that are weighing on prices. And weighing they are. Brent has failed to break above the mid-$50s/bl, despite a disciplined cuts programme that has been in place since the start of this year, and has found itself most comfortable at well below $50/bl — below year-earlier levels — since last month’s agreement to extend the cuts.
Well, it’s been a bit hectic on the LNG desk this past week. And that’s the question we’ve been asked the most.
Along with: “Can Qatari LNG tankers use the Suez Canal?”, “How is it impacting the LNG market?”, and “What else do I need to know?”
And my personal favourite: “Can you explain the situation to me in less than 10 seconds?”
Well, I’ll try. But it is fair to say that we don’t have all the answers. And it will definitely take longer than 10 seconds.
The crisis pitting Saudi Arabia and the UAE against Qatar is the most serious turbulence to afflict the Gulf Co-operation Council (GCC) bloc since what is now called ‘the First Gulf War’, when non-member Iraq briefly invaded and occupied member state Kuwait.
The major difference between today’s crisis and those dramas, of course, is that there is no military dimension now, and no military escalation is to be expected. But the political fallout is massive.
This week’s deliberations in Vienna have not done a lot for the near-term oil price — front month Brent is well under $52/bl today, less than 5pc higher than it was one year ago when a production cut was just a twinkle in the eye of the harder-pressed Opec members. Continue reading