AEP on oil glut, deflation
"To avoid confusion, let me be clear that the dangers of dwindling oil supplies in the long-run have not gone away. Easy reserves of crude are being depleted. New fields are more costly. Peak oil may have the last laugh. Yet this should not be confused with the short-term risks of deflationary shock.
I recently attended a Transatlantic Dialogue on Energy Security with senior military officers in London and Washington. The message was that shale will come and go - with US tight gas peaking by 2017 - creating a false sense of security as the deeper strategic threat continues to build. That is broadly my view as well. Much drama can intrude along the way."
Re: AEP on oil glut, deflation
Thanks. He's always an intersting read.
This gem in there:
Deutsche Bank said Saudi Arabia may have to slash its output by a quarter to 7.5m b/d this year to stop the bottom falling out of the market. The Saudis no longer have such money to spare. They are propping up an elephantine welfare nexus to keep a lid on explosive tensions in the Eastern Province, home to Saudi oil and its aggrieved Shia minority. A cut of this size would push the budget into deep deficit.
This comes as Iran makes its peace with the West. Its 30-year vendetta with US - Iran's natural ally in many ways - no longer makes sense. President Hassan Rohani is no doubt pushing his luck by describing the nuclear deal as a "surrender" to Iran by the great powers, but let him have his flourish to save face. "It does not matter what they say, it matters what they do," retorted the White House.
Wishing I had that GWB on the carrier Mission Accomplished photo on file to paste up just now/.