Oil & Gas Editorial: Epiphany And Kings From The East Bearing Gifts
On January 6th, adherents of the Christian faith celebrated Epiphany, the observance of the visit of the gift-bearing Magi, three kings from the East, to the newborn Christ child in Judea in the 15th year of the rule of Tiberius Caesar.
As the festive season drew to a close, the oil and gas world welcomed the price of a barrel “comfortably” over $50 for the first time in a long time, the gift from kings in the East this time manifesting not as gold, frankincense and myrrh but a production cut by the Organisation of Petroleum Exporting Countries (OPEC).
After the oil price dive that has cost the hydrocarbons industry more than a quarter of a million jobs and seen record bankruptcies since 2014, the miners of the Black Gold will be hoping for an easier journey as 2017 unfolds. But is that a case of wishful thinking at loggerheads with fiscal and geopolitical reality?
Oil discoveries plummeted to 60-year lows in 2016, which will do much to buoy the hopes of oversupply evaporating gradually over the course of the next 12 months, but the halcyon days of oil even touching the $80 mark are a mere pipe dream, absent a catalysing event of geopolitical import: Russia turning off the spigot to Western Europe's gas supply, the closing of a major energy chokepoint like the Straits of Hormuz, or World War III, for example.
Next week we will be publishing an in-depth analysis of a number of the factors that we think will shape the energy fold and the world at large in 2017. Strap in and brace yourselves, it looks like we are in for a bumpy ride…..