As the August Brent futures contract traded firmly below US$65 a barrel days after publication of the latest Saudi production data, London played host to the ninth round of the World National Oil Companies Congress.
In case you haven’t heard, the Saudis pumped 10.31 million barrels per day in May – the subject of many a chat at the event, atop of course why Algerian and Iranian officials, who usually turn up in numbers at such places (going by past experience), were conspicuous by their absence.
The congress threw up some interesting talking points. To enliven crude conversations, you can always count on Chris Cook (pictured above), former director of the International Petroleum Exchange (now ICE) and a research fellow at UCL, who told the Oilholic that Brent – deemed the global proxy benchmark by the wider market – has had its day and was unfit for purpose.
“I have been saying so since 2002. The number of crude oil cargoes from the North Sea has been diminishing steadily. On that basis alone, how can such a benchmark be representative of a global market?”
Cook would not speculate on what might or might not happen at the Iranian nuclear talks, but said the entry of additional Iranian crude into the global supply pool was inevitable. “With India and China at the ready to import Iranian crude, Europeans and Americans would have to come to some sort of accommodation with rest of the world’s take on the country's oil.”
In line with market conjecture among supply-side analysts, the industry veteran agreed it would be foolhardy to assume Iran might try to flood the oil market with its crude, a move that is likely to drive the oil price even lower in an already oversupplied market. Cook also declared that OPEC was on life support as it struggles to grapple with current market conditions.
With oil benchmarks stuck in the $50-75 range, Keisuke Sadamori, Director of Energy Markets & Security at the International Energy Agency, said a “firmer dollar” and current oversupply would make a short to medium term escape from the said price bracket pretty unlikely. (Here is one’s Sharecast report for reference).
Earlier in the day, Andy Brogan, global oil and gas transactions leader at EY, noted that the industry would have to contend with volatility for a while. “There appears to be little confidence in a medium term bounce in the price of oil. With the industry in the midst of a profound change, IOCs have recently gone through a very rigorous review of their portfolio.”
Brogan opined that this would have implications for their partnerships with NOCs and fellow IOCs going forward. With the old tectonic plates shifting, IOCs wanting to conserve cash, NOCs craving a bout of further independence and the oil price stuck in a rut, that’s something worth pondering over. But that's all for the moment folks. Keep reading, keep it ‘crude’!
Brogan opined that this would have implications for their partnerships with NOCs and fellow IOCs going forward. With the old tectonic plates shifting, IOCs wanting to conserve cash, NOCs craving a bout of further independence and the oil price stuck in a rut, that’s something worth pondering over. But that's all for the moment folks. Keep reading, keep it ‘crude’!
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To email: gaurav.sharma@oilholicssynonymous.com
To follow The Oilholic on Google+ click here.
To follow The Oilholic on Forbes click here.
To email: gaurav.sharma@oilholicssynonymous.com
© Gaurav Sharma 2015. Photo: Chris Cook, former director of the International Petroleum Exchange and research fellow at UCL, speaking at World National Oil Companies Congress, London, UK, June 16, 2015 © Gaurav Sharma.
