Oil: special focus

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'We remain more concerned about the future trajectory in oil than any other macro risk at this point in time.' It is not hard to see why. Crude oil prices have dropped precipitously, raising challenging questions about where they might go in 2015. Below are the latest articles, and choice archive material, regarding this precious commodity…

oil pump-600

Middle East - Africa - Latin America - Emerging Europe - Asia

 

Recent global coverage:

 
   

Price pressures force change in oil and gas treasury strategy
November 2016 
The oil and gas sector has so far avoided making wholesale change to its treasury processes, but as the low price environment continues, firms are now being forced to explore cost cutting.

Mexico: Pemex woes deepen amid oil rout
May 2016 

Pemex-R-600
Record losses and huge debts hit CDS; sovereign contagion free, so far.

Country risk: Oil crisis sharpens Nigeria’s investor risks 
April 2016 
Muhammadu Buhari posters-R-600
A plunging country risk score illustrates how the problems are still mounting for Africa’s largest economy.

Energy: PE weighs risks as banks shun oil and gas 
April 2016 
Private equity firms quick to exploit oil sector distress; end investors remain cautious.

Regulation can't help oil patch banks 
April 2016 
It is the wider impacts that could undo financial firms, whatever the regulators recommend.

Oil slump raises Venezuela default risk
February 2016
Sovereign highly exposed to oil price drop; default still not fully priced into bonds.

US high yield pays a high oil price
April 2015
Outflows of $2 billion in one week; investors seek shorter duration.

M&A: Energy consolidation on cards as oil price tanks

January 2015
M&A needs to be long term; Corporates under pressure to re-lever

Euromoney Country Risk survey results 2014: Negative oil shock creates new threats

January 2015
With falling oil prices sending the currencies of hydrocarbons producers tumbling, amid political instability, conflict risk and weak, unbalanced economies persisting, almost half the world’s sovereigns endured higher risk in 2014.

 
   

Oil price lessons from 1983

December 2014 
Crude oil prices dropped precipitously in the latter part of 2014, raising challenging questions about where they might go in 2015. Undershooting well below a mythical fundamental equilibrium price is a distinct possibility if history is any guide. 


Oil might soon be $25 a barrel or less

From the archives - February 1983: 
What Bluford H Putnam and Lee Thomas said about the falling oil price in 1983.
Oil_1983_illustration
   

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Inside investment: Oil – let it flow, let it flow


December 2014
Oh the markets outside are frightful, but the dollar is so delightful, add oil for a rosy glow, let it flow, let it flow, let it flow.

US high-yield feels full force of oil price collapse

December 2014
Some parts of the US market are 'carnage’; energy bond maturity wall is not due until after 2017.

Emerging markets ride 2014 FX rollercoaster

December 2014
"At the current price of oil, India will practically eliminate its current-account deficit, for the first time in a decade, which should mitigate pressure on the rupee."

Global economy's end-of-year verdict: 'Try harder'

Sponsored by VTB Capital;  December 2014
There is an elevated risk of a global recession in 2015 given eurozone stagflation, setbacks in Japan, a debt-ridden China, the risk of the oil-price collapse triggering geopolitical risk and diminishing returns from G7 monetary stimulus. 

VTB 2015 1 
    

Sliding oil price heightens risks for energy-exporting nations

December 2014 euromoney.com
Economists have been downgrading oil exporters’ risk scores in recent weeks, but there might be worse to come if spot prices and petro-currencies continue to fall.

Against the tide: A new era for energy

December 2014
The recent dramatic fall in the crude oil price poses the question: is this just a blip due to temporary fears about global economic growth, or is it the start of a longer-term shift in market dynamics?

 Colapse in brent crude

Middle East


Middle East: Kuwait still cooking with falling oil

April 2015

The country is vulnerable to a continuing low oil price, but that doesn’t seem to be stopping it from keeping up the pace of capital projects. And there are still plenty of reforms to make if the state is to develop the economy.

Saudi risk score plummets as oil shock intensifies

December 2014The sovereign’s risk score has fallen in recent days as lower oil prices add to the Kingdom’s existing economic, political and structural weaknesses.

Best Managed Companies in the Middle East 2014: Oil/Gas/Chemicals/Petrochemicals sector

November 2014 

Best Middle East Research House 2014: Oil/gas/chemicals/petrochemicals sector

November 2014

Africa

Angola goes after diversification
September 2015
The fall in the oil price and the de-dollarization of the economy has done even more to highlight Angola’s over-dependence on oil. As a result, the diversification of the economy is higher-up on the government’s agenda than ever before.

Angola: New exchange faces liquidity question


September 2015

Chief executive admits concerns; equity trading planned for 2016.

Nigeria’s investment banks feel the squeeze

July 2015

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Like everything else in Nigeria, investment banking will be hit by weak oil prices. Local players may struggle more than their global counterparts.

Nigeria's troubles hold lessons for corporate IB

July 2015
Commodity price drop will drive NPLs; difficulties could help local capital markets.

Nigeria: falling oil price, crumbling legitimacy?

June 2015
Depressed oil prices mean that government revenue in Nigeria is sliding but raising revenue without alienating Nigeria’s most vulnerable will be a difficult feat.

Africa: Nigeria’s banks stare down the barrel

May 2015
Inspired by the previous government’s agenda, Nigeria’s banks loaded up on loans to local oil and gas companies. The rapid decline in the price of oil has put many of the companies they lent to in distress. Can the banks cope with the potential fall-out?

Nigeria: Good luck, Buhari

May 2015
Peaceful elections in Nigeria herald a new era for the country, but will the elation last while depressed oil prices hold back the country’s development?

Emerging markets: Weak oil prices, stronger Africa

February 2015
The falling oil price has hit oil exporters hard, especially in Africa. But the region has three strengths that should protect its capital markets from the current crisis.


Angolan SWF chairman calls for greater support as oil price falls

December 2014
The Angolan government could provide greater financial support to its fledgling $5 billion sovereign wealth fund (SWF), according to its chairman, amid rising concerns over the impact falling oil prices will have on the country's economy.


Carlyle picks up stake in Nigeria's Diamond Bank

November 2014
Executives from Diamond Bank and Carlyle reveal the rationale for the latter's investment in the lender, citing the long-term investment horizon despite the oil-driven volatility in Nigeria’s economy.

Angola sets sights on capital-markets reform

November 2014
Following the global financial crisis, Angola’s economy took another blow and further delayed the opening of the exchange. With heavy reliance on oil exports, the crisis saw prices for Angola’s crude plummet from around $140 per barrel to $60. Unable to pay back loans secured by oil revenue, construction came to a halt. Angola was forced to turn to the IMF for support.


Latin America

Oil slump raises Venezuela default risk
February 2016
Sovereign highly exposed to oil price drop; default still not fully priced into bonds.

Oil pours trouble on Venezuela’s economy

September 2015
Parallel FX rate rockets; default more and more likely.

Oil drop prompts Mexico review

April 2015
Growth rates revised downwards; investors still 'cautiously’ optimistic.

Colombia faces oil price test

December 2014
No short-term response to price shift; fiscal discipline key to economy.

Latin America: Sovereigns shape up for differentiation

November 2014
"Mexico is going to be a new player and a strong player and it has tremendous potential.  Oil companies are going to be interested in investing in Mexico ...But Colombia will remain competitive"

Emerging Europe


Russia's risk score plummets to its lowest since 1998 default

November 2014
If oil prices remain low for a prolonged period and, simultaneously, Russian companies’ and banks’ access to foreign funding is severely curtailed, "we are likely to see a significant uplift in sovereign and banks’ credit risk."

Russia central bank attempts rouble crisis circuit-breaker

November 2014

Russia incentive to implement difficult reforms has an inverse correlation to the oil price, and oil-price surges back to $100-per-barrel levels could further delay fiscal efforts.

Asia

Taxing times for Indonesia’s new finance minister

May 2015
Technocrat Bambang Brodjonegoro has plans to turn the country’s state-owned enterprises into regional, if not global, leaders. But the fall in the oil price could quickly scupper his ambitions, unless he can improve Indonesia’s terrible record on tax collection.

Oil and Abenomics in the great yen tug of war

January 2015
The yen has been quietly strengthening in recent days, amid renewed concerns about global demand pushing down the price of oil and fresh fears over Europe. If this trend persists, it could be problematic for Japanese prime minister Shinzo Abe, who is closely associated with a policy of yen weakness.