The End of History (again)

So now its agreed. The oil price is “range-bound”. It’s a bit less clear what the range actually is, but variously $40-$50/bbl or $40-$60/bbl.  The “Lower for Longer” scenario playing out exactly as expected. We can all sit back and watch the US shale (“Light Tight Oil” or “LTO”) be turned on when supply is constrained and prices rise and off when supply outpaces demand and prices drop.  And this will continue briefly until oil demand falls off a cliff and we all drive off into the sunset in EVs.  “Lower for Longer” has become “Lower Forever”.

Don’t we all love a nice neat narrative.

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Random thoughts from the news

Venezuela

When I first visited Caracas in 1994, I was struck by how one could see that a once prosperous city had lapsed into decline. Goodness knows what it is like now.  The levels of deprivation are unparalleled in countries of a similar standing. Meanwhile by some miracle Venezuela manages to continue producing some 2.4mmbbls/day of oil. The country is split – as witnessed by last weeks phoney-war; government loyalists queued to test the voting infrastructure – as a dry run for the real elections for the new Constituent Assembly on July 30th, whilst opposition supporters queued to vote in an unofficial referendum. This referendum provided a 98% rejection of the current adminsitration, with reportedly 7.2m votes cast. An unsurprising result given that only opposition supporters voted. Whilst this is a big number it is only about 30% of the eligable voters, so the country remains deeply divided.

Prior to this referendum, the news from Venezuela was largely burried in all the First-World fluff, but it is reported that over 100 people have been killed in protests this year – this is a tragedy in the making for (many) of the people of Venezuela. But at what point is this not geo-political risk for the oil price? Looks to me like the single biggest “wild-card” out there at the moment.

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