The region’s upstream industry has bounced back from the malaise of 2008 strongly on the back of high oil prices, sent even higher this year by the ongoing diplomatic crisis with Iran and supply shocks in several non-OPEC states.
A Financial Times report suggests the recent surge in prices is not be here to stay, and should not be priced to commecial arrangements in by regional oil companies.
Javier Blas at the Financial Times has reported on the large discrepancy between spot and longer-dated future oil price contracts, which signals a belief that oil prices are set for a severe fall in the medium term.
Blas reports that while spot oil prices are up almost $20 since the start of the year to around $125 a barrel, oil for delivery in December 2018 has risen only $1 to around $95, with the 30-year gap being the largest on record.
The gap between spot and three-year dated oil is around $25 a barrel, Blas reports.
The report emphasises the importance of the region’s upstream sector to make conservative price assumptions in their business models, as political events and uncertainties plague the current supply and demand outlook in oil markets.
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