08.04.2020
Return to an Old Paradigm
Opinions
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Sadad I. Al Husseini

President of Husseini Energy.

The rapid and unforeseen collapse in the oil markets is the outcome of an economic crisis which has very little to do with Russia, OPEC and OPEC plus. It is a situation that may continue to occur every time there is a serious global crisis of one sort or another. We have been there with excess capacity in 1985, 1996, 1998, 2008, 2014 and now, yet again!

Based on a variety of assessments, the current economic crisis has resulted in a 15 Mbd loss of oil demand, the duration of which may extend for months to come.

In past crises, it took years to climb out of every cycle of such a collapse in oil demand.

Given this challenging outlook, oil producers must seek an industry-wide capacity financing strategy that can prevent the recurrence of excess capacity crises in a realistic and sustainable manner.

In the near term, the only methodology that is now available on an industry-wide basis to reduce excess capacity is a return to free market oil pricing based on full cycle economics.

The Pandemic and the Price of Power
Rawi Abdelal
The medium-run future of energy markets will be dependent primarily on the course of the pandemic and the effectiveness of central banks and governments, rather than on the supply decisions of Russia and Saudi Arabia.
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Beyond this crisis, however, a price ceiling of $40 – 45/barrel of Brent could be adhered to as an efficient economic ceiling that would prevent the development of many marginally profitable projects that are not sustainable below such prices.

Seeking to establish and maintain such an economic hurdle for all new oil projects should be the objective of OPEC, OPEC+ and all other major producers in the oil industry.

Lasting Effects of COVID-19 on States and Societies
J.Scott Carpenter
The COVID-19 pandemic will permanently change our societies predominantly by accelerating changes that were already underway. This will happen in ways large and small, and many will be positive, but not all.
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