Publications: The Petroleum Economics Monthly

Energy-Exporting Countries Must Rescue the EU (November 2011)

Global oil markets will enter 2012 teetering on a precipice. While many market analysts cheerfully forecast higher prices next year, those investors and planners with a modicum of sense recognize that chances for a fourth price collapse are increasing daily. By Christmas Day, the probability of Brent trading below $50 per barrel by the end of March will likely be above ninety percent. In other words, another price collapse is almost a sure thing.

It is not inevitable, however. Energy-exporting countries—particularly Russia, OPEC members, Australia, and Canada—may be able to prevent it by acting forcefully. These nations need to buy large amounts of debt issued by currently solvent EU members, particularly Italy, Ireland, Spain, and Portugal. Such purchases might stave off the region’s economic failure. If they do it right, the exporting nations could even increase their income. For this to work, though, they need to act quickly and aggressively.

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