Well that escalated quickly! Nothing in the news indicated that the world’s major oil producers would fail to make a deal over the weekend. But the talks in Doha failed to produce the promised production cuts. The world remains awash in crude oil and oil futures fell 6% in early Asian trading.
It recovered as the day went on. But it’s clear that Saudi Arabia and Iran are not best friends forever (BFF). Wire services say the Saudis balked at a deal that did not include Iran. The Iranians – who’ve just had decades of crippling international sanctions removed – are keen to produce and sell as much oil as possible to generate cash.
And thus the power of the oil cartel enters its twilight. Good riddance. And yes, it’s a supply and demand story. Technology has unlocked energy reserves that were previously uneconomic to drill for. That’s led to an explosion and supply at the same time demand growth has waned.
But there is more to the supply story than fracking and shale. You have to add renewables and solar to the mix now. Lower costs, better efficiencies and newer technologies are challenging the reign of global big oil. None too soon.
Category: Market updates