Publications: Notes at the Margin

Implications of the New Market; The Importance of Forward Prices (October 24, 2016)


Saudi oil minister Khalid al-Falih spoke to the Oil and Money Conference in London last week, assuring his listeners that the market was "clearly rebalancing" and promising that OPEC and non-OPEC nations would work together to raise prices and reduce price volatility. He also warned of prospective shortages if the industry did not resume investment. ExxonMobil CEO Rex Tillerson, who spoke after the Saudi minister, did something very unusual. In polite terms, he wished the audience and the Saudis "lots of luck, suckers." Tillerson, in other words, said flat out that prices would not likely rise significantly. This week's report reviews Tillerson’s points to show why he took the unprecedented step of treating a Saudi oil minister like a wayward pupil in a class limited to the oil industry’s top leaders.


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