Oil

Highlights If it can maintain production discipline over the next 2-3 years, OPEC 2.0 will be the oil market’s most important determinant of price levels for years. The massive increase in OPEC 2.0 spare capacity resulting from COVID-19-induced demand…

Highlights Oil-price volatility will remain subdued as markets correctly downgrade measurable risks on the supply side and upgrade financial conditions supporting demand (Chart of the Week). OPEC 2.0’s spare capacity – ~ 7mm b/d – presents the producer…

Highlights The leading providers of fundamental oil data differ sharply in their estimates of demand destruction caused by the COVID-19 pandemic. This will keep uncertainty over the trajectory of prices elevated this year. Our forecast of demand…

Highlights The Beirut blast calls attention to instability in the Shia Crescent. A turbulent push for political change will now ensue in Lebanon. Hezbollah’s and Iran’s political capital in Lebanon will suffer significantly. Lebanon is a red herring, but…

Highlights The implementation of an oil-price hedging strategy by Russia’s government – consisting of put buying a la Mexico’s strategy for putting a floor under government revenues – would force us to re-consider our bullish view. On the one hand,…

Highlights The EU’s €750 billion fiscal package, along with another round of US stimulus likely exceeding $1 trillion, will support global oil demand. On the supply side, OPEC 2.0’s production discipline likely holds, and US shale output will remain…