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Showing posts from June 5, 2022

Thaw in relations between the US and Saudi Arabia: good news for the crude oil markets - at last!

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There are strong indications in Washington that President Biden, after all, is going to meet the Crown Prince of Saudi Arabia, Mohammed bin Salman, leaving many political bigwigs of the Democratic Party in an uneasy lurch. President Biden, who promised to take on Saudi Arabia over its 'human rights record' during the presidential campaign, did partially keep to his promise during the early days of his administration: the US administration halted sale of some advanced weapons to the Kingdom; it even went as far as removing Patriot anti-missile defence system from Saudi Arabia at some point, leaving it highly vulnerable to the Houthi drone and missile attacks, a situation that prompted the latter to borrow them from Greece on short-term basis. In March this year, however, US took heed of the Saudi request to provide it with the antimissile interceptors for the Patriot system and fulfilled the need. In addition, the US influence may have resulted in a fewer attacks by the Houthis

Will the sky-high energy prices put a damper on energy transition?

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Energy Transition: image credit -NextEra Energy The prices of crude oil and LNG, liquified natural gas, went up again on  high  and the obvious absence of the factors that usually bring them down are worrying economists over the impact on the global economy as a whole. In the UK, for instance, it recorded the highest daily jump in price on Wednesday in 17 years.  With the ambitious embrace of renewables failing to bring about the much-needed consolation to the beleaguered consumers, there are ominous warnings from the giants in the energy sector that the enthusiasm for environmentally-friendly alternatives may wane unless the issue is addressed in a pragmatic manner - and soon, of course. Michael Wirth, the CEO of Chevron, for instance, fears that the rise in energy prices at this rate will slow down the transition from fossil fuels to renewables, despite the promises made at the COP26  summit in November, last year -  with plenty of  fanfare ; he went on to say that if the status quo

Falling oil prices: why is it just wishful thinking?

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  The price of crude oil is steadily rising and on Friday, the primary benchmarks,  WTI and Brent, hit a record high at $118.87 and $119.72 respectively. Neither the decision by the OPEC+ to increase the output by 648,000 bpd for July and August nor the fear of a global recession buckles the trend; as far as the OPEC+ is concerned the estimated figure, based on a previous group decision, for June remains 432,000 bpd. The fact of the matter, however,  is OPEC+ is still restoring the production cuts that it was forced to make, when the oil price crashed at the height of the pandemic in 2020, rather than increasing the net output.  In short, the rise in oil output, claimed by the cartel, is not sufficient to increase the supply in a dramatic way; the supply woes remain the same while the global consumption has already reached the pre-pandemic level. Although economists have been warning about the impact on the global economy as a whole by the surging energy costs and the inevitable slowin