The politics of global oil markets: what will happen next?

Oil markets have seen enormous volatility over the past few months, hitting highs of $147/b before dramatically correcting to around the $50-60/b mark. Political factors and speculation undoubtedly drove the market up, but the bigger question now, is how low OPEC will allow the market to fall as demand slackens.

Scope of this report 

• Awareness of political dynamics and market speculation dictating oil market fundamentals.
• Detailed discussion of OPEC positioning on future production cuts and budgetary pressures in producer states.
• Strategic analysis of OPEC and non-OPEC relations in setting a floor under the oil price.
• Critical analysis of power shifts taking place within the cartel and the impact on benchmark prices.

Research and analysis highlights 

While OPEC was largely a gleeful spectator of the oil markets up to July 2008 when prices hit a staggering $147/b, it has resumed centre stage in the oil markets once more as prices plummeted to $55/b.

Geopolitical friction was undoubtedly used to drive prices up, just as readily as investors ignored political risk when dragging prices back down, but geopolitics now matters more than ever for the oil markets.

Politics matters again to the oil markets, but not in the sense of how far it will drive the price up, but more at what price a floor will be set as a global downturn sets in. Slackening oil prices are more likely to exacerbate resource nationalism and production cuts, rather than a fundamental change of political direction in producer states.

Key reasons to read this report 

• Understand how political factors within OPEC states will influence decisions on the oil price
• Gain critical insight into oil market dynamics and how OPEC, non-OPEC producer relations will develop.
• Understand opportunities and threats that political risk will create for oil markets over the coming years.

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