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Fri, 26th May 2017

Anirudh Sethi Report

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Latest Posts

Today’s Stunted Oil Prices Could Cause Oil Price Shock In 2020

As oil prices remain unsteady and OPEC continues to make headlines every hour, the world is focused on oil’s immediate future. As Saudi Arabia announces plans to slash production and move their economy away from oil dependency, many industry insiders are predicting that the now over-saturated market will reach an equilibrium with higher commodity prices by 2018 and U.S. shale production will continue to grow along with global demand.

Robert Johnston, the CEO of one of the world’s biggest political risk consultancies, is unconvinced. In a speech made at the Association of International Petroleum Negotiators’ 2017 International Petroleum Summit, Johnston laid out his concerns for the future of oil.

Despite the recent dip in oil prices, industry experts have been predicting a supply-gap and rising oil prices for years. This is due in large part to an oil investment drought marked by two year of consecutive decline, a statistic that has no precedent in the oil industry. This year a report by the International Energy Agency concluded that if oil investment remains stagnant over the next few years, by 2020 we will see a significant increase in the price of oil as global demand continues to climb.

The IEA’s Executive Director Fatih Birol addressed these findings in a keynote address at the Atlantic Council Global Energy Forum in Abu Dhabi in January, announcing that no major oil projects were started in the last year and there were zero large oil discoveries “because there is no money for exploration. You find something if you look for it,” Birol said.

The potential supply gap has far-reaching implications that we are not ready to combat. Gas and oil are still fundamental to much of the world’s infrastructure, despite a steady increase of research and utilization of renewable energy resources. While electric cars continue to show a promising future, especially in the light of ambitious new green car policy initiatives in India and China, they still account for less than 2 percent of the world’s cars. And, as the global middle class continues to grow and exercise their buying power, the demand for oil will continue to grow alongside them.

The oil industry desperately needs new sources of oil, and they need new investors and technologies to find those sources quickly. There are currently a wide variety of techniques employed to find new deposits (seismic prospecting, well logging, gravity surveying, magnetic prospecting, and geochemical prospecting, etc.) but these are all methods with significant limitations in their ability to accurately estimate the size of new oil and gas deposits.

Many companies, including oil giant BP, have begun efforts to develop of artificial intelligence programs with algorithms that will allow them to find and drill with unprecedented accuracy in the future, but the technology is not yet ready. We can only hope that it will be ready by 2020 or that the IEA is wrong in their predictions. 

No Greece deal at Eurogroup, issue to be reviewed in June

Eurozone finance ministers, the International Monetary Fund and the Greek government failed to agree at talks on Monday on a release of further bailout funds for Athens and reached no deal on further offers of debt relief for Greece, EU officials said.

According reports, the issue will be discussed again next month.

Eurogroup President Jeroen Dijsselbloem said at the conclusion of a meeting of the single currency bloc’s 19 finance ministers that Greece has made “huge progress” on implementing the policy package required of it in return for the money it needs to avoid going bankrupt. He said Monday that Greece still has a few actions to undertake while the institutions overseeing the country’s bailout still have to make some checks.

He also said an agreement on Greek debt relief measures was not possible and that further discussions will need to take place before the next meeting of the so-called eurogroup in three weeks, by which time he hopes that the International Monetary Fund will get on board with Greece’s bailout program.

Sources earlier said that an initial meeting, involving all eurozone finance ministers, yielded a mostly positive assessment of Greece’s adoption of a series of prior actions.

Subsequent talks, aimed at reaching a comprehensive agreement that also tackles Greece’s debt, were trickier.

MSCI to make decision on China A-share inclusion on June 20

Mark your calendars China watchers.

MSCI will on June 20 announce whether it would finally include China’s domestic A-shares in its global indices.

The US index provider last June delayed for a third straight year the A-shares’ inclusion into its benchmark $1.5tn emerging markets stock index, citing regulation worries and accessibility for global investors.

Ahead of this year’s decision, China has embarked on a series of new actions aimed at addressing these concerns. Its banking regulator has launched a “regulatory windstorm” while the central bank has made the first move to ease capital controls, providing much needed liquidity to the offshore renminbi market.

Meanwhile, BlackRock has for the first time publicly backed the inclusion of onshore stocks in MSCI’s indices and Chinese officials have even criticised dividend-dodging companies, dubbed “iron cockerels”, and promised extra scrutiny.

20 Dead, 100s Injured After “Terror Incident” At Ariana Grande Concert In Manchester – Live Feed

Media now reporting at least 20 fatalities and hundreds of injuries
  • An explosion came towards the end of an Ariana Grande concert
  • Earlier Manchester Police confirmed multiple fatalities and injuries
There are no credible reports of a cause so far
Update:
  • BBC says explosion being treated by authorities as a terror incident

 

Bitcoin Blows Through $2100

Bitcoin is now up over 135% year-to-date, having screamed above $2000 and $2100 overnight as the dollar limped to 6-month lows…

Having shrugged off China crackdowns and worries over ‘hard forks’, it appears the legalization of the virtual currency in Japan (with Peach Aviation now accepting bitcoin for flight ticket purchases) and broader adoption in Russia have fueled demand in recent weeks…

Donald Trump’s Saudi Speech: Full Transcript

I want to thank King Salman for his extraordinary words, and the magnificent Kingdom of Saudi Arabia for hosting today’s summit. I am honored to be received by such gracious hosts. I have always heard about the splendor of your country and the kindness of your citizens, but words do not do justice to the grandeur of this remarkable place and the incredible hospitality you have shown us from the moment we arrived.

You also hosted me in the treasured home of King Abdulaziz, the founder of the Kingdom who united your great people. Working alongside another beloved leader—American President Franklin Roosevelt—King Abdulaziz began the enduring partnership between our two countries. King Salman: your father would be so proud to see that you are continuing his legacy—and just as he opened the first chapter in our partnership, today we begin a new chapter that will bring lasting benefits to our citizens.

Let me now also extend my deep and heartfelt gratitude to each and every one of the distinguished heads of state who made this journey here today. You greatly honor us with your presence, and I send the warmest regards from my country to yours. I know that our time together will bring many blessings to both your people and mine.

I stand before you as a representative of the American People, to deliver a message of friendship and hope. That is why I chose to make my first foreign visit a trip to the heart of the Muslim world, to the nation that serves as custodian of the two holiest sites in the Islamic Faith.