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The rift between Saudi Arabia and Iran has quickly ballooned into the worst conflict in decades between the two countries.
Oil prices jumped on the first trading day of 2016 as Middle East tension outweighed a selloff in financial markets around the world.
OPEC says that $10 trillion worth of investment will need to flow into oil and gas through 2040 in order to meet the world’s energy needs. The OPEC published its World Oil Outlook 2015 (WOO) in late December, which struck a much more pessimistic note on the state of oil markets than in the past.
Every year around the world, hundreds of millions of children wait anxiously for Santa Claus to arrive and bring presents and good cheer. But what if Santa never came? What if this year the reindeer all fall ill, perhaps due to Crazy Reindeer disease (the analog to Mad Cow) and Santa is forced to cancel Christmas? The result would be devastating.
Business is business, so why not buy oil from ISIS. The Russians claim the Turks are doing it, and in all likelihood, even Assad is buying it. No one can fight a war without oil, according to Robert Bensh, partner and managing director of Pelicourt LLC oil and gas company. However, while the politically unhinged are coming out the woodwork, the more important aspects of this story remain elusive to the public.
With OPEC breaking down and any kind of coordination among its members on price cuts looking increasingly unlikely, it now appears that oil prices could remain below $50 a barrel for a year or more. As producers confront this unpleasant reality, some will finally start to significantly curtail or even shut down operations. That is going to severely hurt an all but invisible group; strippers in the United States.
There has been some revealing new information coming out recently regarding the strategy against ISIS. One aspect many find troubling is the apparent failure of U.S. and coalition forces to sufficiently target and destroy oil infrastructure located in ISIS territory, which accounts for a significant portion of the terror group's annual income.
As the terrorist attack in Paris sparks worldwide fear of similar reprisals and a bloody shootout and hostage situation in a five-star Mali hotel exacerbates those concerns, global energy security reels under the pressure of unfathomable geopolitics. In an exclusive interview with Oilprice.com, Robert Bensh—managing director and partner at Pelicourt, a Western-owned oil and gas company navigating tricky conflict zones—discusses:
• The terrorist threat to global energy security
• What ISIS is really after
Crude oil just capped off a third straight week of declines, as WTI nears the $40 per barrel threshold. Goldman Sachs is once again raising the possibility of oil dipping into the $20s per barrel. That spells more pain for the energy sector. Many companies have already slashed spending and culled their payrolls, but the total number of job losses continues to climb.
According to Graves & Co., an industry consultant, oil and gas companies have laid off more than 250,000 orkers around the world, a tally that will rise if oil prices remain in the dumps.
Russia's central bank recently warned about the growing financial risks to the Russian economy from Saudi Arabia encroaching upon its traditional export market for crude oil. Russia sends 70 percent of its oil to Europe, but Saudi Arabia has been making inroads in the European market amid the oil price downturn.
Oil and gas companies have had a tough time over the past year trying to weather the storm of falling oil prices. However, the political and financial winds are moving in the wrong direction for the industry, raising more "above ground" problems at a time that they can ill-afford it.
One casualty of the oil price downturn could be the megaproject.
For years, as conventional oil reserves depleted and became increasingly hard to find, oil companies ventured into far-flung locales to find new sources of production. Extracting oil from these frontier areas required advanced technology and a lot more capital: Ultra deepwater, Arctic offshore, heavy oil sands, and increasingly, the Lower Tertiary.