Paul Horsnell Quotes (17 Quotes)

The issue of Iran's international relations continues to rise to the fore as a major potential area of market concern. It now seems likely that the EU3 of Germany, UK, and France will later this week abandon the mothballed talks with Iran.

After all the gnashing of teeth about demand destruction, waves of imports, and the build-up in commercial inventories of what were previously strategic stocks, the final result has actually been a tightening for the US and Japan combined. Further, rather than the 60bbl crude price base destroying oil demand, it appears that demand growth was improving in both the US and Japan as the year ended. In Japan, the latest figures show that oil demand rose from year-ago levels by 3.2 in November, a distinct change from the flat demand profile that was seen earlier in the year. Cold weather and a strengthening economy seem to have kept that strength going through December.

The market faces the prospect of years without sufficient flexibility or insulation from shocks during a period of extreme geopolitical stress.

The shortage is in gasoline, so you would need to add huge amounts of crude oil to have even a minor impact on prices. This is a time when the shortage has nothing to do with crude oil, and OPEC cannot fix it.

But the scale of the fall remains beyond that which would be expected, given the difference in supply lines, and regardless of its motivation it still raises the question as to how inventories for the driving season can be built in a timely fashion.

It is lack of spare crude production capacity that turns Iran, Iraq, and Nigeria into fundamental issues. Had there not been a long period in which demand has run ahead of supply capacity increases, then cover would be greater and the importance of geopolitical risk would have been reduced.

If you had a magic wand solution, your magic wand would give you a few more refineries within the US system,

The loss of short-haul heavy crude oil imports into the U.S. market is now becoming significant. None of that effect is currently in the U.S. weekly data, although it can be expected to depress imports in at least the next two weeks of data.

There is no instant turnaround. It could take five years, six years or seven years.

The industry has gone through such a contraction that getting it to expand again is proving difficult. These companies are not equal to the sum of their parts.

We believe that Iran matters more than is currently priced in, and that Iran's external relations remain the key wild card.

The potential consequences don't even bear thinking about. There's such a concentration of refineries and chemical plants in a relatively small area that anything of that kind of intensity would be extremely nasty.

The market seems to have pushed far too far, far too fast and on the basis of far too little hard information.

The most immediate concern remains Iraq, where the prospect of further severe political and economic setbacks appears to be increasing.

We are in the middle of a fairly ferocious energy price spike. The spike could be checked by a move back towards normality in Venezuela, or by a release of U.S. strategic reserves. However, the application of either of these brakes does not look particularly imminent, and in their absence the upwards pressure is likely to continue.

The U. S. inventory situation remains extremely tight, with total inventories still falling and gaining no ground on the five-year average.

Developments are continuing to enforce a very downbeat view on prospects for the Iraqi oil sector. In all, the recently increased number of analyses implying imminent and unavoidable price collapses do seem a little premature.