Oil-asset fire sale: political well-connected global players will cherry-pick valuable assets for a bargain

Geopolitics and finance are driven by energy strategies and the other way around. To win a war you have to destroy the energy resources of your enemy and secure your own resources. We already noticed in 2013 that oil was in a bubble, we are now entering a phase where oil prices are so low it will destroy a big chunk of the oil industry. Without government intervention the destruction in the upstream oil industry will be devastating.  Production capacity of the oil industry could end up below the level of future demand. As production capacity is below demand we expects prices rebound into a bubble again. We are definitely not in the era of cheap energy. Oil prices will rebound but investing in oil, oil futures and oil related companies, could be a very risky strategy. Holding oil futures comes with a cost, as rolling them over is not free of charge and many oil related companies will not survive the downturn.
Global operating oil companies, except for BP, seem well prepared for the ongoing oil price decline according to our estimation.

The oil market will be one of the main factors in global financial turmoil the coming months. Oil companies are under pressure of falling oil prices, they have to seek for lower costs in every area of operations. Continue reading